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In this paper, we propose a fast full-pel variable block size motion estimation algorithm called fast Walsh search in variable block size (FWS-VBS). FWS-VBS employs a new error measurement defined in Walsh-Hadamard domain, which is called partial sum-of-absolute difference, to identify likely mismatches. Mismatches are rejected by thresholding method and the thresholds are determined adaptively to cater for different activity levels in each block. Early termination techniques are employed to further reduce the number of candidates and modes to be searched of each block. Experimental results show that FWS-VBS performs equally well to the exhaustive full search algorithm and requires only about 10% of the computation time.