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I have set my live IP in /etc/hosts.allow, and deny all other hosts. I have also set PermitRootLogin without-password in /etc/ssh/sshd_config.
Is that a secure method? Can an attacker crack my key and login to my server? If yes then please explain how it is possible.
This is a common misunderstanding for the PermitRootLogin feature. The without-password option does not mean there is no authentication and anyone can get in without a password. All this option means is that logging in is only possible using a fallback method, such as public key authentication. Even if an attacker knows your root password, they will not be able to log in unless they have your private key.
It is actually better to use without-password if you need to log in as root, since it ensures that the root account cannot be brute forced. If you were to log in as root with a password, it could be subject to being remotely attacked, whereas public key authentication ensures you can only log in with the proper credential files. This is better than logging in as a different user and using su to elevate to root, as a compromise of that other user would result in a compromised root, since the user can monitor any keystrokes entered into its shell. This is explained in detail in the answer to Which is the safest way to get root privileges: sudo, su or login?.
If you do not need to have root, then using another, dedicated user would be fine. In this case, setting PermitRootLogin no would be beneficial, as there is no reason to have root access if not required.
Yes it's a secure method because you can't brute force cryptographic key.
For example if you use a RSA key (ssh-keygen -t rsa) https://crypto.stackexchange.com/questions/3043/how-much-computing-resource-is-required-to-brute-force-rsa
The only solution for the hacker is to steal your private/public keys.
First let's see what does it mean:
PermitRootLogin
Specifies whether root can log in using ssh(1). The argument must be yes, prohibit-password, forced-commands-only, or no. The default is prohibit-password.
If this option is set to prohibit-password (or its deprecated alias, without-password), password and keyboard-interactive authentication are disabled for root.
If this option is set to forced-commands-only, root login with public key authentication will be allowed, but only if the command option has been specified (which may be useful for taking remote backups even if root login is normally not allowed). All other authentication methods are disabled for root.
If this option is set to no, root is not allowed to log in.
Better practice is to use PermitRootLogin no, because you don't want to allow root to directly authenticate into the system.
Edit 19.1.2022:
5.3.10 Ensure SSH root login is disabled (Automated)
Disallowing root logins over SSH requires system admins to authenticate using their own individual account, then escalating to root via sudo . This in turn limits opportunity for non-repudiation and provides a clear audit trail in the event of a security incident
Source: CIS for Ubuntu Linux
/etc/hosts.allow is useful for an additional layer of protection, but it must not be relied on for authentication. You do not want someone who is able to pivot through your computer or your ISP, or even just get your old IP when it switches (e.g. with dynamic IPs) to be able to access your server.