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Sensor networks have been proposed for military and scientific applications such as border security and environment monitoring. They are usually deployed in unattended and hostile environments, so security is a major concern. A fundamental requirement in wireless network security is the ability to establish keys between pairs of sensors. In this paper, we propose a new location-based key management protocol in which polynomial-based and random key pre-distribution are both used for key establishment between sensor pairs. Key establishment between near sensors is provided by the polynomials, while key establishment between far sensors is accomplished by random key pre- distribution. Using these two approaches simultaneously reduces the overhead required for key establishment. Analysis is presented which shows that the proposed scheme has good performance compared with other approaches.