An improved encoding approach to multiple-image optical encryption based on a cascaded phase retrieval algorithm (CPRA) is proposed. The system consists of several stages of a standard 4-f correlator, in which the keys are not only the phase mask pairs produced by CPRA but also the phase distribution of the output plane of the front stage. The security and the capacity of the system are also discussed. Results indicate that the system can resist known-plaintext attack to some extent, and the encrypted capacity is considerably enhanced. Computer simulations have proved the validity of the proposed idea. The system can be implemented using a pure optical architecture.