A lossy compression tolerant data hiding method is proposed in this paper. The image which hides data is named a stego-image. Most of data hiding methods will lose some hidden data when the stego-image is compressed by iossy compression process. However, there are few people will transmit image without lossy compression in the public internet. By the proposed method, the stego-image can be compressed by lossy compression method to reduce the image size. The receiver extracts complete data correctly from the lossy compressed image. Our hiding technique is based on the Vector Quantization (VQ) and the lossy compression technique of JPEG. The human visual system is difficult to detect there are unusual pixels in the stego-image. Because the proposed method is tolerant of lossy compression, it speeds up the transmission of stego-image and coincides with the transmitting image on the internet.