A novel lossless covert communication method based on predictive coding for image is presented. The method uses a linear predicitve error algorithm and a embedding/extracting algorithm. A great deal of secret messages are embedded during the lossless compression. The original host image is restored without any distortion from the marked image after the hidden data is retrieved. The proposed method has greater capacity of secret message and gets less effect of quality of marked image compared with other algorithms. The experimental reshs have been given in local networks. The method has been ap- plied to secure stroage and covert communication for infrared, remote-sensing,medical and military Jmages.