The following is derived from S-Tools BMP - How it is done by Andy Brown:

"S-Tools works by 'spreading' the bit-pattern of the message file to be hidden across the least-significant bits of the color levels in the image. S-Tools tries to reduce the number of image colors in a manner that preserves as much of the image detail as possible. It is difficult to tell the difference between a 256 color image and one reduced to 32."

"S-Tools adds some extra information on to the front of the message file before hiding. 32 bits of time-dependent random garbage is added first. This step means that two identical hidden files that are encrypted in CBC or PCBC mode will never encipher to the same ciphertext. The 32 bit length of the hidden file is then included. This is required for S- Tools to be able to extract the hidden file. Encryption will conceal this value."