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Block truncation coding (BTC) is an efficient compression technique with extremely low computational complexity. However, the blocking and false contour effects are two major deficiencies in BTC which cause severe perceptual artifacts. The former scheme, error-diffused BTC (EDBTC), can significantly improve the above issues through the visual low-pass compensation on the bitmap, which thus widens its possible application market, yet the corresponding security issue may limit its value. In this paper, a method namely complementary hiding EDBTC is developed to cope the above issue. This paper is managed by firstly discussing when a single watermark is embedded, and then multiple watermarks are employed to test the limitation of the proposed scheme. Herein, an adaptive external bias factor is employed to control the watermark embedding, and this factor also affects the image quality and robustness simultaneously. Experimental results demonstrate that the proposed method only requires an extremely small external bias factor to carry watermarks, which enables a high capacity scenario without significantly damaging image quality.