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This paper presents a novel, real-time digital image stabilization (DIS) system using a modified proportional integrated (MPI) controller to remove stably unwanted shaking from an image sequence that is captured by a hand-held video camera without affecting the deliberate panning motion of the camera. Researchers have addressed the trade-off problem between the removal of shaking and the preservation of global camera movement. This paper analyzes motion compensation, which is formulated as a control problem. A compensating motion vector (CMV) estimation method with a modified PI control system is proposed both to remove the unwanted jitter and to preserve the deliberate, panning motion of the camera. Experimental results demonstrate that the proposed system provides robust motion compensation of image sequences in various conditions.