Cluster indexing-based steganography is an important branch of data-hiding techniques. Such schemes normally achieve good balance between high embedding capacity and low embedding distortion. However, most cluster indexing-based steganographic schemes utilise less efficient clustering algorithms for embedding data, which causes redundancy and leaves room for increasing the embedding capacity further. In this paper, a new clustering algorithm, called progressive exponential clustering (PEC), is applied to increase the embedding capacity by avoiding redundancy. Meanwhile, a cluster expansion algorithm is also developed in order to further increase the capacity without sacrificing imperceptibility.