SteganoG is a small portable tool which can hide confidential files inside BMP format images.
The program is simple to use. Point it at the file you'd like to hide, and the image, provide a passphrase, and your file will be encrypted, then hidden inside the picture. Double-click this and it'll open as usual to display the original image, but only someone who has a copy of SteganoG, and knows the passphrase, will be able to extract the secret file.
SteganoG has some limitations. The fact that it only supports bitmaps (BMP or DIB) is a particular problem, for instance. If your original data file is very large then it'll be obvious to anyone looking at the directory listing that there's something odd about the image. And you do need a fairly large carrier image before the program will work at all (if it's too small in comparison with the data file then SteganoG will complain).
Still, the program's straightforward in operation, and does offer you several configuration options, including a choice of encryption algorithms (Blowfish, RC4, Skipjack, TEA, Twofish), so it may be handy if you're looking for a way to, say, transfer confidential files on a USB flash drive without anyone spotting their significance.
It has a few limitations, but SteganoG still provides a simple way to keep confidential files hidden away from snoopers