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In this study, a novel and efficient fog removal algorithm is proposed. Fog formation is because of attenuation and airlight. Attenuation reduces the contrast and airlight increases the whiteness in the scene. Proposed algorithm uses anisotropic diffusion to recover scene contrast. Simulation results demonstrate that proposed algorithm outperforms prior state-of-the-art algorithms in terms of contrast gain, percentage of number of saturated pixels and computation time. Proposed algorithm is independent of the density of fog and does not require user intervention. It can handle colour as well as grey images. Along with the RGB (red, blue and green) colour model, proposed algorithm can work for HSI (hue, saturation and intensity) model which further reduces the computation. Proposed algorithm has a wide application in tracking and navigation, consumer electronics and entertainment industries.