A method for compensating for perceived blur due to motion between a current frame and a previous frame of a digital video sequence comprises estimating a motion vector between the frames for each of a plurality of pixel blocks in the current and previous frames. A cluster motion vector is then estimated for each of a plurality of clusters of the motion vectors based on one of vectors in each cluster and motion vectors in proximate clusters. The cluster motion vector of its corresponding cluster is allocated to each pixel in the current frame. An initial guess frame is generated based on the current frame and pixels in the guess frame are blurred as a function of their respective allocated cluster motion vectors. Each blurred pixel is compared with a respective pixel in the current frame to generate an error pixel for each respective pixel. Each error pixel is blurred and weighted and then each error pixel and its respective pixel is combined in the initial guess frame thereby to update the guess frame and compensate for blur. A system and computer program for perceived blur compensation is also provided.