Abstract: Near-end echo-reduction is achieved by passing a transmit signal through a first filter bank and feeding a remote signal plus an echo of the transmit signal through a second filter bank, then subtracting a gain-coefficient-compensated (scaled) version of the filtered transmit signal from the filtered-composite-remote signal to obtain an echo-reduced receive signal. The echo-reduced receive signal is suitably employed by tone decoders, voice response mechanisms, and the like, in a telephone system, and avoids false alarms due to near-end echo. In one embodiment, the gain coefficients are fixed for each frequency of interest. In another embodiment, the gain coefficients are dynamically arrived at based on the filtered transmit signal and the echo-reduced receive signal. The two filter banks can be combined in one, multiplexed filter bank.