A new method is presented for the localization of synthetic references (SRs) in digital images based on normalized correlation. An augmented search template is used, which consists not only of occupied pixel fractions of the desired SR, but also of derivatives of these fractions with respects to shifts along the image axes. The resulting correlation values are higher than those based on standard correlation, especially for small SRs and unfavorable subpixel displacements between the template and the scene. The augmented template can also be used to determine the location of the SR to subpixel accuracy. The precision of this determination is affected less by systematic and random error than is the case for centroiding or sampled correlation interpolation, and can be estimated explicitly from the calculated correlation value. Numerical examples are given.