Received * / Accepted * Abstract. We have developed a three-dimensional radiative transfer method designed specifically for use with parallel adaptive mesh refinement hydrodynamics codes. This new algorithm, wh ich we call hybrid characteristics, introduces a novel form of ray tracing that can neither be classified as long, nor as shor t characteristics, but which applies the underlying princi ples, i.e. efficient execution through interpolation and paralleliza bility, of both. Primary applications of the hybrid characteristics method are radiation hydrodynamics problems that take into account the effects of photoionization and heating due to point sources of radiation. The method is implemented in the hydrodynamics package FLASH. The ionization, heating, and cooling processes are modelled using the DORIC ionization package. Upon comparison with the long characteristics method, we find tha t our method calculates the column density with a similarly high accuracy and produces sharp and well defined shadows. We show the quality of the new algorithm in an application to the photoevaporation of multiple over-dense clumps. We present several test problems demonstrating the feasibility of our method for performing high resolution three-dimensional radiation hydrodynamics calculations that span a large range of scales. Initial performance tests show that the ray tra cing part of our method takes less time to execute than other parts of the calculation (e.g. hydrodynamics and adaptive mesh refinem ent), and that a high degree of efficiency is obtained in parallel ex ecution. Although the hybrid characteristics method is developed for problems involving photoionization due to point sources, the algorithm can be easily adapted to the case of more general radiation fields.