The paper describes a symmetric encryption algorithm based on bit permutations and using an iterative process combined with a chaotic function. The main advantages of such a cryptosystem is its ability to encrypt securely bit sequences and assuring confusion, diffusion and indistinguishability properties in the cipher. The algorithm is applied on the image encryption where the plain-image is viewed as binary sequence. The results of statistical analysis about randomness, sensitivity and correlation on the cipher-images show the relevance of the proposed cryptosystem.