This project presents a parametric binary tree labeling scheme (PBTL) to label image pixels in two different classes. Utilizing PBTL, a data embedding technique (PBTL-DE) is proposed to enhance proposed data to an image by exploiting spatial redundancy within small image blocks. We at that point apply PBTL-DE into the encrypted domain and propose a PBTL-based reversible data hiding technique in encrypted images (PBTL-RDHEI). PBTL-RDHEI is a separable and reversible strategy that both the original image and secret data can be recovered and extracted losslessly and freely. Experimental results and analysis demonstrate that PBTL-RDHEI can accomplish an average embedding rate as large as 1.752 bpp and 2.003 bpp when the block size is set to 2 × 2 and 3 × 3, respectively.