Normally when user uploads any file that file is stored on single cloud service provider. From a customer’s point of view relying upon a solo Service Provider for his outsourced data is not very promising. In addition, providing better privacy as well as ensuring data availability, can be achieve by dividing the user’s data block into data pieces and distributing them among the available Service Providers in such a way that no less than a threshold number of Service Providers can take part in successful retrieval of the whole data block. In the proposed system a secured cost-effective multi-cloud storage (SCMCS) model in cloud computing which holds an economical distribution of data among the available Service Providers in the market, to provide customers with data availability as well as secure storage. Along with file storage on multiple clouds, here invention focusses on ‘Data Deduplication’ technique also. Deduplication is a method of removing duplicate files or data from the storage, and is used in cloud computing environment to minimize storage space as well as network bandwidth. In data deduplication single copy of file is stored in cloud environment, which is owned by a large number of data users which may leads to reduced reliability, availability and security. Along with deduplication, there is a major issue of security for sensitive data, when the data has been outsourced on the cloud. By addressing security challenges, we attempt to formalize the secure distributed deduplication system. Here we are proposing new distributed data deduplication system, which achieves more confidentiality, integrity and reliability, as compare to the traditional deduplication system. In the proposed system single data chunk or file is divided and distributed on the multiple cloud storage servers, in such a way that the single part of file is unpredictable. This is done by introducing a Shamir secret sharing scheme and hashing algorithms in distributed cloud storage system, without using traditional ways of encryption-decryption scheme. Also proposed system will be focusing on the recovery and reconstruction of corrupted data or failed storage site without using traditional backup or recovery methods as like RAID array method.