I am implementing an image encryption algorithm and in one phase I would like to change the least significant bit of the pixel. As per steganography, there is a stego-key which can be used to overwrite the LSB of pixels. But, how is the stego-key determined at the receiver end. Also, would like to know if changing the least significant bit from 1 to 0 or 0 to 1 is also considered as steganography?
But, how is the stego-key determined at the receiver end.
Key management or even encryption is not specifically part of steganography. You may perform key agreement by hiding that as well, but again, steganography is only about the hiding of the information. Encryption may be used to let the message to appear random as well as adding an additional layer of security though. Data that appears to be random may be easier to hide.
See the following definition from Wikipedia:
the practice of concealing messages or information within other non-secret text or data.
Also, would like to know if changing the least significant bit from 1 to 0 or 0 to 1 is also considered as steganography?
That is likely the case yes. But note that if you have a completely blue background that your message would still be visible - if encrypted as random changes. But in general, if the chances of the least significant bit being set is more or less random, then it would make a prime candidate for steganography.
You might however question how many times raw RGB (or whatever other lossless format) is exchanged, where the pixels are more or less random. That in itself could be considered a hint that something strange is going on. As long as you try to hide the message it would probably still be called steganography though.