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A major problem today for car owners is that they are in constant fear of having their vehicles stolen from a common parking lot or from outside their home. Image processing based real time vehicle theft detection and prevention system provide an ultimate solution for this problem. The system described in this paper automatically take photos of driver and compares his or her face with database to check whether he is an authenticated driver or not. He can have access to the vehicle only if he is an authenticated driver. If he is not an authenticated driver an alarm rings and electrical connections are not activated. The technology used here is face recognition and face detection in real time. As the photos are taken in real time, several problems like unequal illumination and changes in the background may affect the system. To overcome this problem DCT normalization and background cancellation algorithms are incorporated along with basic face detection and face recognition algorithm. In this paper software and hardware details of the system are discussed. Technologically system is simple, accurate and maintainable.