A new technique of optical image encryption and decryption based on the methodology of virtual optics is proposed. The technique is based on the free space propagation optical system and encodes the target image into two different phase masks (PM) by using cascaded iterative angular spectrum phase retrieval approach (CIASA) and both two phase masks can serve as enciphered texts. The proposed algorithm employs an improved scheme, i.e. modifying the phase distributions of two phase masks synchronously and enlarging the search space, and the time complexity of the algorithm is discussed, too. Computer simulations show that the algorithm generates much faster convergence and better image quality for the decrypted image and key space enlarged. These characters may introduce high security-level that makes the encrypted image much harder to be decrypted by an unauthorized person.