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• A RDH scheme in encrypted image based on adaptive encoding strategy is proposed. • Block permutation and stream cipher are applied to encrypt original image contents. • By analyzing MSB distribution, embeddable blocks and auxiliary data can be decided. • MSB layers are encoded with occurrence frequency to vacate room for data embedding. • Additional data are embedded into encrypted image with reversed Huffman codewords. Recently, reversible data hiding in encrypted image have attracted extensive attentions, which can be applied in secure cloud computing and privacy-preserving image processing. In this paper, a reversible data hiding scheme in encrypted image based on the adaptive encoding strategy is proposed. On the content-owner side, block permutation and stream cipher encryption are applied to mask the contents of original image. Through analyzing the distribution of MSB layers, embeddable blocks are first determined and auxiliary data are then generated by data hider. In order to vacate room for data accommodation, MSB layers of embeddable blocks are adaptively compressed according to occurrence frequency of MSB. Thus, additional data can be embedded into MSB layers of encrypted image together with reversed Huffman codewords and auxiliary data. Based on the availability of encryption key and data-hiding key, the receiver can realize separable operations of data extraction, image decryption and image recovery efficiently. Experimental results demonstrate that, our scheme not only can achieve satisfactory rate-distortion performance, but also can obtain greater embedding rate compared with the state-of-the-art schemes. [ABSTRACT FROM AUTHOR]