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Biometric template protection is one of the most important issues in deploying a practical biometric system. To tackle this problem, many algorithms, that do not store the template in its original form, have been reported in recent years. They can be categorized into two approaches, namely biometric cryptosystem and transform-based. However, most (if not all) algorithms in both approaches offer a trade-off between the template security and matching performance. Moreover, we believe that no single template protection method is capable of satisfying the security and performance simultaneously. In this paper, we propose a hybrid approach which takes advantage of both the biometric cryptosystem approach and the transform-based approach. A three-step hybrid algorithm is designed and developed based on random projection, discriminability-preserving (DP) transform, and fuzzy commitment scheme. The proposed algorithm not only provides good security, but also enhances the performance through the DP transform. Three publicly available face databases, namely FERET, CMU-PIE, and FRGC, are used for evaluation. The security strength of the binary templates generated from FERET, CMU-PIE, and FRGC databases are 206.3, 203.5, and 347.3 bits, respectively. Moreover, noninvertibility analysis and discussion on data leakage of the proposed hybrid algorithm are also reported. Experimental results show that, using Fisherface to construct the input facial feature vector (face template), the proposed hybrid method can improve the recognition accuracy by 4%, 11%, and 15% on the FERET, CMU-PIE, and FRGC databases, respectively. A comparison with the recently developed random multispace quantization biohashing algorithm is also reported.