How to create an image with transparent background
header('content-type: image/png');

$image = imagecreatetruecolor(900, 350);

imagealphablending($image, true);
imagesavealpha($image, true);

$text_color = imagecolorallocate($image, 0, 51, 102);
imagestring($image,2,4,4,'Test',$text_color);

imagepng($image);
imagedestroy($image);

imagefill($image,0,0,0x7fff0000);

alpha = 0x7f
red = 0xff
green = 0x00
blue = 0x00

$im = @imagecreatetruecolor(100, 25);
# important part one
imagesavealpha($im, true);
imagealphablending($im, false);
# important part two
$white = imagecolorallocatealpha($im, 255, 255, 255, 127);
imagefill($im, 0, 0, $white);
# do whatever you want with transparent image
$lime = imagecolorallocate($im, 204, 255, 51);
imagettftext($im, $font, 0, 0, $font - 3, $lime, "captcha.ttf", $string);
header("Content-type: image/png");
imagepng($im);
imagedestroy($im);