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One of the main application of image encryption is to transmit secure information between parties. The aim is to transmit the image securely over the network such that no unauthorized user be able to decrypt the image. In this paper, we propose a new encryption algorithm by transforming the original image into the encrypted one using randomly generated vectors. The original image is decrypted by applying least square approximation techniques on the encrypted image and the randomly generated vectors. The method has been tested for a large number of images. The numerical results have demonstrated the effectiveness of the proposed algorithm and shown enhancement in security.