Abstract: A method for encoding and decoding still video frames, and a sequence of frames of digitized motion picture video data, using inter-frame analysis. Sequences of frames are encoded by first subdividing each frame within a set of adjacent frames into a plurality of blocks, each corresponding to at least one other block within at least one adjacent frame, so as to create a group of corresponding of blocks. A luminance component of each pixel within each group of corresponding blocks is averaged to generate a mean luminance value for each group of corresponding blocks. An upper color value for each group of corresponding blocks is determined, as well as a lower color value. A one-bit value is assigned to each pixel within each block. The one-bit value is set to a first binary level when the luminance component of an associated pixel value is greater in magnitude than the corresponding mean luminance value.