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In order to protect the privacy and the security of the tag, we propose a mutual authentication protocol for low-cost RFID system. The protocol ensures that the reader (or server) and the tag authenticate each other, provides the privacy and security properties for low-cost RFID system and also has good performance. The protocol resists almost all attacks except cloning attack, and achieves backward secrecy without any assumption and forward secrecy under an assumption. We also show that it requires less storage than other related RFID protocols.