Motion estimation is a progression used to estimate motion vectors between two or more images with a high degree of temporal redundancy. It is commonly used in video compression to attain high compression ratios as well as used in several applications for object tracking. In this paper a novel approach for diamond search algorithm has been recommended to overcome the problem encountered by several existing block matching algorithms especially with full search algorithm in reference of peak signal-to-noise ratio, required number of examine or search points as well as computational complexity. Simulation results reflect that recommended algorithm acting well compared to all existing algorithms. Experimentally 88–99% of the motion vectors are found inside the circle which has radius of 3-pixel unit and fixed on the place of zero motion. The proposed algorithm is used to implement various standards examples such as MPEG1 and MPEG4.