The image reconstructed in ordinary digital holography was unable to bring out desired resolution in comparison to photographic materials; thus making it less preferable for many interesting applications. A method is proposed to enhance the resolution of digital holography in all directions by placing a random phase plate between the specimen and the electronic camera and then using an iterative approach to do the reconstruction. With this method, the resolution is improved remarkably in comparison to ordinary digital holography. Theoretical analysis is supported by numerical simulation. The feasibility of the method is also studied experimentally.