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Conventional block based motion estimators assume constant inter-frame object brightness. Pixel discrepancy is resulted primarily from motion factor without considering the influence of brightness changes. In this paper, we propose a simple and efficient windowing technique using the Hamming window and integrate it to our previously proposed algorithm. The algorithm is based on retinex approach using the DCT technique and designed to handle brightness variations. The new technique manages to greatly reduce the influence of ripple effect and further increase the compression efficiency without adding any extra overhead bits to the bit-stream. We applied the scheme to H.264 for testing. Experimental results show that the retinex based approach is an effective technique to handle inter-frame brightness variations and outperforms the H.264 system with weighted prediction enabled for sequence involving brightness variations. With our proposed windowing technique using the Hamming window, the coding efficiency can be further improved by a maximum of 0.17 dB.