In this hybrid method, we consider, in addition to traditional finite elements, the Trefftz elements for which the governing equations of equilibrium are required to be satisfied a priori within the subdomain elements. If the Trefftz elements are modelled with boundary potentials supported by the individual element boundaries, this defines the so-called macro-elements. These allow one to handle in particular situations involving singular features such as cracks, inclusions, corners and notches providing a locally high resolution of the desired stress fields, in combination with a traditional global variational FEM analysis. The global stiffness matrix is here sparse as the one in conventional FEM. In addition, with slight modifications, the macro-elements can be incorporated into standard commercial FEM codes. The coupling between the elements is modelled by using a generalized compatibility condition in a weak sense with additional elements on the skeleton. The latter allows us to relax the continuity requirements for the global solution field. In particular, the mesh points of the macro-elements can be chosen independently of the nodes of the FEM structure. This approach permits the combination of independent meshes and also the exploitation of modern parallel computing facilities. We present here the formulation of the method and its functional analytic setting as well as corresponding discretizations and asymptotic error estimates. For illustration, we include some computational results in two- and three-dimensional elasticity.