This study introduces a novel graphical multi-factor authentication (MFA) algorithm that integrates user image hashes and dynamic image grids with cell addresses (DIGCA) to optimize storage requirements with robust security. The algorithm stores image hashes rather than actual images, significantly reducing storage space while maintaining security integrity. In contrast to the existing image recognition algorithm, the algorithm shows a drastic reduction of 99.9% in storage requirements. Performance analysis demonstrates that the algorithm provides a high level of accuracy with a 95.36% success rate in user authentication over an extended period. Again, the image grid and cell addresses prove an ample password space and entropy. With the minimum assumption grid size, it achieves a password space of 1.36 × 10 !" , Which makes it virtually impossible for an attacker to guess the correct combination. The results underscore the algorithm's potential as a superior alternative to existing MFA schemes, offering both security and practicality in modern authentication systems.