An adaptive data hiding scheme capable of hiding considerable quantities of secret data while preserving acceptable visual quality for cover images is proposed. The major idea of this scheme is to hide secret data into the compressed codes of cover image during the encoding process of side-match vector quantization (SMVQ) such that the interceptors will not capture the secret information. Based on the experimental results, it is confirmed that the proposed scheme is better than earlier works. Moreover, the receiver can efficiently receive both the compressed cover image and the hidden secret data at the same time.