In this paper, a hybrid multi-resolution wavelet transform based optical cryptosystem is proposed. The hybrid multi-resolution wavelet is formed by using conventional Walsh transform and fractional Fourier transform, here the fractional orders of the fractional Fourier transform extends the key-space of the proposed cryptosystem to avoid any brute-force attack. The designed cryptosystem possesses non-linear characteristics. To validate and verify the proposed cryptosystem computerized simulations have been carried out on the gray scale images. Results demonstrate that the proposed cryptosystem offers higher protection against occlusion and noise attacks.

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