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In this paper, the blind image deconvolution (BID) problem is addressed using the Bayesian framework. In order to solve for the proposed Bayesian model, we present a new methodology based on a variational approximation, which has been recently introduced for several machine learning problems, and can be viewed as a generalization of the expectation maximization (EM) algorithm. This methodology reaps all the benefits of a "full Bayesian model" while bypassing some of its difficulties. We present three algorithms that solve the proposed Bayesian problem in closed form and can be implemented in the discrete Fourier domain. This makes them very cost effective even for very large images. We demonstrate with numerical experiments that these algorithms yield promising improvements as compared to previous BID algorithms. Furthermore, the proposed methodology is quite general with potential application to other Bayesian models for this and other imaging problems.