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A residual echo cancellation scheme based on the autoregressive (AR) analysis is proposed for hands-free telephony. Residual echo is whitened by the inverse filter using the estimated AR coefficients. Removing the speech characteristics of the residual echo signal, the noise reduction system successfully reduces the power of residual echo as well as that of ambient noise. In a car cabin, the proposed method improved the echo return loss enhancement by 8.7/spl sim/9.9 dB as compared with the conventional combined system.