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In real world, an image is usually associated with multiple labels which are characterized by different regions in the image. Thus image classification is naturally posed as both a multi-label learning and multi-instance learning problem. Different from existing research which has considered these two problems separately, we propose an integrated multi- label multi-instance learning (MLMIL) approach based on hidden conditional random fields (HCRFs), which simultaneously captures both the connections between semantic labels and regions, and the correlations among the labels in a single formulation. We apply this MLMIL framework to image classification and report superior performance compared to key existing approaches over the MSR Cambridge (MSRC) and Corel data sets.