Encryption of binary images is essential since it is vulnerable to eavesdropping in wired and wireless networks. The security of data becomes important since the communications over open network occur frequently. A new binary image encryption algorithm is proposed in this paper. The proposed algorithm is based on combination of confusion and diffusion. Firstly, used Logistic chaotic sequence to confuse the addresses of the binary image pixels, then decomposed the confused image into a number of bit planes, finally defined a new diffusion algorithm to achieve the pixel value diffusion by the bit plane transposed encryption. In this way, the proposed algorithm transforms drastically the statistical characteristic of original image information, so, it increases the difficulty of an unauthorized individual to break the encryption. The simulation results and the performance analysis show that the algorithm can encrypt binary images of different sizes and has large secret-key space, high security, fast encryption speed and strong robustness, and is suitable for practical use to protect the security of digital binary image information over the Internet.