Pel-recursive motion estimation algorithms are an attractive alternative to block-matching motion compensation algorithms for video coding because (a) they do not require that motion information by transmitted over the channel, and (b) they allow the reconstruction of continuously varying motion fields. Unfortunately, the high computational complexity of these algorithms and their difficulty in tracking varying motion fields, discontinuities in motion fields, and noisy image sequences have led most current video coding algorithms to use block- based rather than pel-recursive approaches to motion estimation and compensation. This paper presents a new, discrete formulation of pel-recursive motion estimates which allows more flexibility in trading off computational complexity for prediction accuracy, and which permits the design of hybrid motion-estimation algorithms sharing characteristics of both pel-recursive approaches and block-matching approaches. Using the discrete formulation, we defined three novel approaches to motion estimation, one in the form of a conventional pel-recursive algorithm and two incorporating various amounts of block-based motion information from the encoder. We present simulations comparing their performance with both standard pel- recursive and block-matching motion estimation algorithms, demonstrating significant improvements in prediction accuracy.