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Motion compensated interpolation is the best algorithm among the methods of video format conversion. However, the accuracy and reliability of the motion vectors have a significant impact on the performance of interpolation. To deal with this problem, a novel motion estimation algorithm with center-biased diamond search and its parallel VLSI architecture are proposed in this paper. Experiments show that it works better than conventional motion estimation algorithms in terms of motion compensation error and robustness, and its architecture overcomes the irregular data flow and achieves high efficiency. It also successively reuses data and reduces the control overhead. So it is highly suitable for HDTV applications.