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A new approach to motion estimation/compensation is presented that uses a morphological pyramidal representation of a dense motion field. The dense field is reduced and coded in a rate-distortion-optimized fashion, in that the compensated frame produced by the encoded motion for a given number of bits minimizes the energy of the residual frame. Relative to standard block-based techniques, the resulting compensated frames are of higher quality while the motion provides a better representation of "true" motion. Additionally, the motion representation delineates objects well. As such, this technique is useful in low-rate applications and in forthcoming object-based techniques.