An algorithm for real-time detection, localization and tracking of periodic signals, which appear as few-pixel blobs in video image sequences and have a characteristic binary pattern in the temporal domain, was developed, implemented and tested. All stages of the algorithm are described and discussed: (1) initial estimation and continuous re-estimation of global motion; (2) local 'signal augmentation' (the crucial step for detecting small-sized signals in image sequences); (3) temporal domain -- followed by spatial domain -- background estimation and subtraction; (4) binarization; (5) preliminary temporal domain pattern matching and subsequent pixel tracking; (6) signal detection and localization by post- processing and clustering, applied to the set obtained in (5); (7) temporal and spatial tracking of the located signals. The algorithm was tested by processing simulated as well as real image sequences. The results are discussed. The algorithm enables for efficient detection of visible signals, provides for reasonable detection even of invisible signals and yields an acceptable false alarm probability. It has also proved to be insensitive to local motions in a video film, to camera motion, to intensity changes and to any weak flickering of background. Strong flickering of background can, however, decrease the probability of detection.