An image recovery algorithm that recovers completely lost blocks in an image/video frame using spatial information surrounding these blocks. One application focuses on lost regions of pixels containing textures, edges and other image features that pose problems for other recovery and error concealment algorithms. The algorithm of this invention is based on the iterative application of a generic de-noising algorithm and does not require any complex preconditioning, segmentation, or edge detection steps. Utilizing locally sparse linear transforms and overcomplete de-noising, good PSNR performance is obtained in the recovery of such regions.