1. A method of embedding digital data in a source image, comprising the steps of: (a) generating a multi-level data image representing the digital data; (b) generating an encoding carrier image f(x,y) having spatially dispersing properties defined by its Fourier transform F(u,v) wherein EQU F(u,v)=.vertline.F(u,v).vertline.e.sup.i.phi.(u,v) with phase response .phi.(u,v).noteq.0; (c) convolving the multi-level data image with the encoding carrier image to produce a spatially dispersed data image altered by the phase response; and (d) adding the spatially dispersed data image to the source image to produce a source image containing embedded data.