Virtual Private Network (VPN) :
VPN offers a connectivity to another network, and when connected your computer receives a new IP address from a VPN provider. Every traffic from your computer routes through the VPN network, so your true IP address assigned by your ISP is hidden.
There are thousands of free web proxy servers that you can use to hide your IP address and surf anonymously. Browsing through a proxy means that you are not accessing a website directly, but going through a intermediate "proxy" which relays the information back and forth between you and the destination website.
So VPN and Proxy hides the ip address.