AES 256 but it doesnt seems to be working in GAE.I have download the "Java Cryptography Extension (JCE) Unlimited Strength Jurisdiction Policy Files" and local_policy.jar,US_export_policy.jar are present in C:\Program Files\Java\jdk1.6.0_29\jre\lib\security location.
here is the code:
That code works in JDK1.7.0_07 and 1.6.0_31 so the problem has to be in GAE. Are you sure you are installing the Unlimited Strength file properly in the GAE?
You should note that the IV used will almost certainly be different (1 in 256^16 chance of being the same) every time you create an instance of AESEncrypter since it is created at random when you init() the Cipher without specifying an IV. This means that using one instance of AESEncrypter to encrypt data and a second to decrypt will not work. I suspect this is the source of your "it doesnt seems to be working" but you need to be specific as to what this means. A random IV to encrypt is a good idea but it has to be stored with the ciphertext so that it can be used in the decryption process; since it does not have to be kept secret I just add it as a prefix to the ciphertext.
I'm not keen on the iteration count being as large as 65536. It means that you will do 65536 SHA1 digests just to create the key. A more normal value for the iteration count is 1000 but even this will be expensive on CPU time.