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Computational complexity and error propagation phenomenon are important drawbacks of existing Decision Feedback Equalizers (DFE) for dispersive channels. A new Iterative Block DFE (IBDFE) is considered where the equalization is performed iteratively on blocks of received signal in the frequency domain i.e. both signal processing and filter design are in frequency domain. Thus computational complexity is reduced and error propagation is limited to one block. The feed forward and feedback filters of DFE are designed with the minimization of Mean Square Error (MSE) at detector input as the parameter for effective detection. Two design methods have been solved and simulated for a Rayleigh fading channel. Channel is assumed to be time in-variant during one block of data (128 symbols) transmission. In the first method, the hard detected data are used as the input to the feedback, and filters are designed according to the correlation between detected and transmitted data. In the second method, the feedback signal is directly designed from soft detection of the equalized signal at the previous iteration. Estimates of the parameters involved in the FF and FB filters are also solved and used to evaluate the filter coefficients. From simulation, it was found that the IBDFE as claimed in the research literature performs better than the time domain DFE.