In this paper,we propose a new algorithm for colour image registration and template matching using hypercomplex phase correlation also known as quaternion phase correlation(QPC). Conventional phase correlation(CPC) technique can only be applied to grayscale images or at most complex images due to some mathematical limitations. A full colour image must be first converted to a grayscale image before performing the phase correlation, during which the chrominance information has been wasted. This new technique can make full use of the luminance as well as the chrominance information in colour images.