A method for performing a motion estimation combined with a Walsh-Hadamard transform algorithm. In image frame, which includes a pixel array to display an image object, the method includes fetching a current image pixel content C and a reference image pixel content R. A Walsh-Hadamard transform algorithm is used to transform the current image pixel content C and the reference image pixel content R, so that a WHT SAD(i, j), WSAD(i,j) is computed to serve as a matching criterion. The formula for computing WSAD(i,j) is.function..times..times..times..function..times..times..times..function- ..function..function. ##EQU00001## W.sub.E(k,l)=WHT(E)=WHT(C--R(i, j))=W.sub.C--W.sub.R(i,j),.function..mu..times..times..times..times..func- tion..mu..times..function..mu..function..function..function..mu..times..ti- mes..times..times..function..mu..times..function..mu. ##EQU00002## where E is the difference macro block (MB) of a current MB and a reference MB, (x, y) is the location of current MB, (i,j) is the candidate motion vector, i.e., the location of reference MB, N is the MB size, and t.sub.i,j=t.sub.it.sub.j', where t.sub.i,j is a matrix by a product of two basis t.sub.i and Trans[t.sub.j].