A system and method for maintaining privacy of a user's telephone number is disclosed. The method provides a means by which a user A may prefer to exchange her contact number with another user B. The contact number is encrypted by user A and passed on to the mobile phone of user B. In the phonebook of user B, the contact number of user A is stored in encrypted format. Further, when user B initiates a call to user A, the encrypted number is sent to the network. At the MSC of user B, the number is decrypted and a call is established with user A. When user A calls user B, user A's number is encrypted at user B's MSC. This is transmitted to user B, where it is compared with the already encrypted number in the phonebook. The matching name of user A is then displayed.