Building next generation routers with the capability of forwarding multiple millions of packets per second is required for the increasing demand for high bandwidth on the Internet. Reducing the required memory size of the forwarding table is a possible solution since small forwarding table can be integrated into the application specific integrated circuit (ASIC). In this paper a hash technique is developed to reduce the size of the IP forwarding table. The proposed data structure is a compressed 8-8-8-8 multibit trie that is based on hash tables of 4-bit addresses. Two optimization techniques are also proposed to further improve the performance of the proposed schemes. Our experimental results show that the proposed hashing-based schemes are better than the Small Forwarding Table scheme both in memory size and lookup latency.