In this paper, a Covert Speech Telephone (CST) is designed and implemented based on the information hiding technique, which works on the internet. To solve the large embedding capacity problem for real-time information hiding, a steganographic system combined with a watermarking scheme is proposed, which skillfully transfers the secret speech into watermarking information. The basic idea is to use the speech recognition to significantly reduce the size of information that has to be transmitted in a hidden way. Furthermore, an improved DFT watermarking scheme is proposed which adaptively chooses the embedding locations and applies the multi-ary modulation technique. Based on the GUI (Graphical User Interface) software, the CST operates on both ordinary and secure mode. It is a completely digital system with high speech quality. Objective and subjective tests show that the CST is robust against normal signal processing attacks and steganalysis. The proposed scheme can be used in terms of military applications. In this paper, a Covert Speech Telephone (CST) is designed and implemented on the information hiding technique, which works on the internet. To solve the large embedding capacity problem for real-time information hiding, a steganographic system combined with a watermarking scheme is proposed, which skillfully transfers the secret speech into watermarking information. The basic idea is to use the speech recognition to significantly reduce the size of information that has to be transmitted in a hidden way. chooses the embedding locations and applies the multi-ary modulation technique. Based on the GUI (Graphical User Interface) software, the CST operates on both ordinary and secure mode. It is a completely digital system with high speech quality. Objective and subjective tests show that the CST is robust against normal signal processing attacks and steganalysis. The proposed scheme can be used in terms of military applications.