Doing a digital image transmission over internet need a secure protection, against illegal copying. Unfortunately, many current data encryption methods such as DES, RSA, AES, and other only suitable for text data, but not for digital image. In this paper, we propose new secure algorithm for image encryption, which based on RC4 stream cipher algorithm and chaotic logistic map. The proposed algorithm works by converting the key to initial value, and then this value is used as an input to chaotic logistic map function to generate a sequence of pseudo random numbers or 256-byte key array. The final step is a permutation process and the result will be XORed with the bytes stream of plain-image to produce cipher-image or XORed with the cipher-image to produce plain-image. The experiment results show that our proposed algorithm: (i) able to make the cipher-image cannot be visually identified, (ii) can eliminate the statistical correlation between the plainimage and cipher-image, (iii) very sensitive to small changes of key, (iv) has no change in image contents (lossless encryption) during encryption or decryption process.