This examples uses the AES algorithm for encrypting passwords. The salt length can be up to 128 bit.

We are using the SecureRandom class to generate a salt, which is combined with the password to generate a secret key. The classes used are already existing in Android packages javax.crypto and java.security.

Once a key is generated, we have to preserve this key in a variable or store it. We are storing it among the shared preferences in the value S_KEY. Then, a password is encrypted using the doFinal method of the Cipher class once it is initialised in ENCRYPT_MODE. Next, the encrypted password is converted from a byte array into a string and stored among the shared preferences. The key used to generate an encrypted password can be used to decrypt the password in a similar way:

public class MainActivity extends AppCompatActivity {
    public static final String PROVIDER = "BC";
    public static final int SALT_LENGTH = 20;
    public static final int IV_LENGTH = 16;
    public static final int PBE_ITERATION_COUNT = 100;

    private static final String RANDOM_ALGORITHM = "SHA1PRNG";
    private static final String HASH_ALGORITHM = "SHA-512";
    private static final String PBE_ALGORITHM = "PBEWithSHA256And256BitAES-CBC-BC";
    private static final String CIPHER_ALGORITHM = "AES/CBC/PKCS5Padding";
    public static final String SECRET_KEY_ALGORITHM = "AES";
    private static final String TAG = "EncryptionPassword";

    @Override
    protected void onCreate(Bundle savedInstanceState) {
        super.onCreate(savedInstanceState);
        String originalPassword = "ThisIsAndroidStudio%$";
        Log.e(TAG, "originalPassword => " + originalPassword);
        String encryptedPassword = encryptAndStorePassword(originalPassword);
        Log.e(TAG, "encryptedPassword => " + encryptedPassword);
        String decryptedPassword = decryptAndGetPassword();
        Log.e(TAG, "decryptedPassword => " + decryptedPassword);
    }

    private String decryptAndGetPassword() {
        SharedPreferences prefs = getSharedPreferences("pswd", MODE_PRIVATE);
        String encryptedPasswrd = prefs.getString("token", "");
        String passwrd = "";
        if (encryptedPasswrd!=null && !encryptedPasswrd.isEmpty()) {
            try {
                String output = prefs.getString("S_KEY", "");
                byte[] encoded = hexStringToByteArray(output);
                SecretKey aesKey = new SecretKeySpec(encoded, SECRET_KEY_ALGORITHM);
                passwrd = decrypt(aesKey, encryptedPasswrd);
            } catch (Exception e) {
                e.printStackTrace();
            }
        }
        return passwrd;
    }

    public String encryptAndStorePassword(String password) {
        SharedPreferences.Editor editor = getSharedPreferences("pswd", MODE_PRIVATE).edit();
        String encryptedPassword = "";
        if (password!=null && !password.isEmpty()) {
            SecretKey secretKey = null;
            try {
                secretKey = getSecretKey(password, generateSalt());

                byte[] encoded = secretKey.getEncoded();
                String input = byteArrayToHexString(encoded);
                editor.putString("S_KEY", input);
                encryptedPassword = encrypt(secretKey, password);
            } catch (Exception e) {
                e.printStackTrace();
            }
            editor.putString("token", encryptedPassword);
            editor.commit();
        }
        return encryptedPassword;
    }

    public static String encrypt(SecretKey secret, String cleartext) throws Exception {
        try {
            byte[] iv = generateIv();
            String ivHex = byteArrayToHexString(iv);
            IvParameterSpec ivspec = new IvParameterSpec(iv);

            Cipher encryptionCipher = Cipher.getInstance(CIPHER_ALGORITHM, PROVIDER);
            encryptionCipher.init(Cipher.ENCRYPT_MODE, secret, ivspec);
            byte[] encryptedText = encryptionCipher.doFinal(cleartext.getBytes("UTF-8"));
            String encryptedHex = byteArrayToHexString(encryptedText);

            return ivHex + encryptedHex;

        } catch (Exception e) {
            Log.e("SecurityException", e.getCause().getLocalizedMessage());
            throw new Exception("Unable to encrypt", e);
        }
    }

    public static String decrypt(SecretKey secret, String encrypted) throws Exception {
        try {
            Cipher decryptionCipher = Cipher.getInstance(CIPHER_ALGORITHM, PROVIDER);
            String ivHex = encrypted.substring(0, IV_LENGTH * 2);
            String encryptedHex = encrypted.substring(IV_LENGTH * 2);
            IvParameterSpec ivspec = new IvParameterSpec(hexStringToByteArray(ivHex));
            decryptionCipher.init(Cipher.DECRYPT_MODE, secret, ivspec);
            byte[] decryptedText = decryptionCipher.doFinal(hexStringToByteArray(encryptedHex));
            String decrypted = new String(decryptedText, "UTF-8");
            return decrypted;
        } catch (Exception e) {
            Log.e("SecurityException", e.getCause().getLocalizedMessage());
            throw new Exception("Unable to decrypt", e);
        }
    }

    public static String generateSalt() throws Exception {
        try {
            SecureRandom random = SecureRandom.getInstance(RANDOM_ALGORITHM);
            byte[] salt = new byte[SALT_LENGTH];
            random.nextBytes(salt);
            String saltHex = byteArrayToHexString(salt);
            return saltHex;
        } catch (Exception e) {
            throw new Exception("Unable to generate salt", e);
        }
    }

    public static String byteArrayToHexString(byte[] b) {
        StringBuffer sb = new StringBuffer(b.length * 2);
        for (int i = 0; i < b.length; i++) {
            int v = b[i] & 0xff;
            if (v < 16) {
                sb.append('0');
            }
            sb.append(Integer.toHexString(v));
        }
        return sb.toString().toUpperCase();
    }

    public static byte[] hexStringToByteArray(String s) {
        byte[] b = new byte[s.length() / 2];
        for (int i = 0; i < b.length; i++) {
            int index = i * 2;
            int v = Integer.parseInt(s.substring(index, index + 2), 16);
            b[i] = (byte) v;
        }
        return b;
    }

    public static SecretKey getSecretKey(String password, String salt) throws Exception {
        try {
            PBEKeySpec pbeKeySpec = new PBEKeySpec(password.toCharArray(), hexStringToByteArray(salt), PBE_ITERATION_COUNT, 256);
            SecretKeyFactory factory = SecretKeyFactory.getInstance(PBE_ALGORITHM, PROVIDER);
            SecretKey tmp = factory.generateSecret(pbeKeySpec);
            SecretKey secret = new SecretKeySpec(tmp.getEncoded(), SECRET_KEY_ALGORITHM);
            return secret;
        } catch (Exception e) {
            throw new Exception("Unable to get secret key", e);
        }
    }

    private static byte[] generateIv() throws NoSuchAlgorithmException, NoSuchProviderException {
        SecureRandom random = SecureRandom.getInstance(RANDOM_ALGORITHM);
        byte[] iv = new byte[IV_LENGTH];
        random.nextBytes(iv);
        return iv;
    }
}