Radio frequency identification (RFID) is one of the most modern technologies in identification and tracking systems. Recently, chipless RFID tags have been invented as a low cost, robust, and adaptive alternative, in order to compete with the traditional barcodes identification. However, due to the passive structure, there are a few drawbacks for chipless RFID tags such as short reading range and limitation of encoding data capacity for chipless RFID tags. Hybrid chipless RFID tags have been invented to cope with the limitation of encoding data capacity. This paper reviews the most recent study on hybrid chipless RFID tags and presents an original work on designing a hybrid chipless RFID tag. A novel 3D encoding technique—frequency, polarisation diversity, and frequency division multiplexing—for chipless RFID tags is proposed. The proposed tag encoding data capacity has increased to 29N, as compared to 22N in the conventional hybrid tags that were reported prior to this study.