The shift-variant property of the discrete wavelet transform (DWT) makes the motion estimation and compensation inefficient in the wavelet domain. In order to overcome the shift-variant property of the DWT, a low-band-shift (LBS) method has been developed. Using the LBS method in the wavelet domain, two motion estimation and compensation schemes are developed and evaluated. One scheme is the motion estimation and compensation using the LBS method with wavelet-block basis and the other is with band-by-band basis. Both schemes using the LBS method have superior performances to the conventional motion estimation methods in spatial domain or wavelet domain with respect to peak-noise-to-signal ratio (PSNR). The experiment results show that the proposed schemes have PSNR improvements of above 1.0 dB to the full-search method in spatial domain. (C) 2001 Elsevier Science B.V. All rights reserved.