n. The practice of creating faked photographs, usually by manipulating the images with software.
Other Forms
The illusionists of fauxtography have created a powerful tool for propaganda. Faking a photo is a simple and effective means of propaganda, and an image once implanted is all but impossible to remove. Complex ballistic trajectories are boring and will always be trumped by a picture of a dead child. My roommate had no clue who al-Durrah was, but he certainly remembered "that kid and his dad who got shot."
—Barry Caro, “The fakes that made a hundred martyrs,” The Daily Princetonian, October 26, 2006
One recent flap involved a veteran Reuters photographer, Adnan Hajj, who was caught and fired for Photoshop enhancements of published images from the Middle East. In one shot, Hajj had added smoke, presumably for dramatic visual emphasis, to a Beirut bombing scene. In another, he apparently dressed up an air-strike photograph from Qana, Lebanon, that featured a dead child with a pacifier. …

While doubt can curdle into cynicism and reflexive distrust, it can also foster more vigorous scrutiny. One clear outgrowth of the unreliable image glut is a new vigilance about all things visual. Self-appointed photo police patrol the media and Internet looking for evidence of "fauxtography" and other forms of eye-deceiving fraud. That Reuters photographer was first brought to ground by sharp-eyed bloggers, empowered by the digital highway.
—Steven Winn, “It's hard to tell where pixels end and reality begins,” The San Francisco Chronicle, September 06, 2006
1996 (earliest)
Art photographers always have used camera and darkroom equipment to create works with meaning. But now they've successfully added computers to their gear — as "Digital Photography '96" at the Peoria Art Guild proves. …

Meanwhile, those who view the show only in cyberspace may try "image processing" themselves with the exhibit's "Digital Fauxtography" application.
—Theo Jean Kenyon, “Art photography has digital ally,” Peoria Journal Star, May 05, 1996
Thanks to Joe Garshae for suggesting this word.