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A new block-based local motion estimator independent of illumination variation is presented. Conventional motion estimators rely on an assumption that the difference between images results solely from motion activities. This hypothesis ignores another possibility, that variation in the contents of an image can be a result of variation in lighting conditions. A local motion estimator, which is independent of the adverse influence of the distinct illumination condition, is presented. The search space of the estimator is effectively restricted to dimension two, which is identical to the conventional block-based motion estimation. To show the accuracy of our proposed estimator, it was applied to sprite generation, which is relatively sensitive to the accuracy of the motion estimator. Experimental results show that our proposed system gives better quality reconstructed images in terms of PSNR as compared with a system using the conventional PDS estimator. Our estimator is particularly suitable for handling video sequences involving a strong variation of lighting conditions and is suitable for sprite coding application in MPEG-4.