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Automatic video segmentation plays an important role in real-time MPEG-4 encoding systems. Several video segmentation algorithms have been proposed; however, most of them are not suitable for real-time applications because of high computation load and many parameters needed to be set in advance. This paper presents a fast video segmentation algorithm for MPEG-4 camera systems. With change detection and background registration techniques, this algorithm can give satisfying segmentation results with low computation load. The processing speed of 40 QCIF frames per second can be achieved on a personal computer with an 800 MHz Pentium-III processor. Besides, it has shadow cancellation mode, which can deal with light changing effect and shadow effect. A fast global motion compensation algorithm is also included in this algorithm to make it applicable in slight moving camera situations. Furthermore, the required parameters can be decided automatically, which can enhance the proposed algorithm to have adaptive threshold ability. It can be integrated into MPEG-4 videophone systems and digital cameras.