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This paper describes a new technique for reducing the blockiness that results from using the reduced-resolution update (RRU) video coding tool. In RRU coding, full resolution prediction error residuals are downsampled and coded at a reduced spatial resolution. In previous versions of RRU, such as that defined in Annex Q of the H.263 standard, each block of prediction errors is processed without using samples from any neighboring blocks. This can lead to severe blockiness in the decoded picture. To reduce this blockiness H.263 Annex Q RRU increases the deblocking filter strength to the maximum value. In the new technique presented here, referred to as RRU+, the downsampling and interpolation filters use residuals from neighboring blocks to prevent the blockiness that results from RRU. Experimental results comparing RRU+, RRU with normal deblocking filter strength (referred to simply as RRU in this paper), and RRU with maximum deblocking filter strength are presented. These results show that, while RRU+ and RRU with maximum deblocking strength both eliminate the blocking artifacts associated with RRU, RRU+ provides better peak signal-to-noise ratio (PSNR) performance than RRU, whereas RRU with maximum deblocking strength degrades the PSNR performance compared to RRU. Results comparing H.264 with RRU/RRU+ are also presented and the effectiveness of RRU/RRU+ as a tool for improving coding efficiency is discussed.