1. A system for displaying on a video display a plurality of frames of a pseudo color image formed from a true color image made of plurality of pixels using a 256 color palette, said plurality of frames being displayed on said video display sequentially so as to produce a displayed image which has apparent movement, said system comprising: (a) means for converting the true color image to the pseudo color image pixel by pixel, using said 256 color palette; (b) means for determining an error value for each color component of a current pixel between its true color value and the pseudo color value; (c) means for adding a first predetermined portion of said error value to the pseudo color values of predetermined pixels adjacent to said current pixel to produce a modified pseudo color image; (d) means for adding a second predetermined portion of said error value to the pseudo color values of corresponding pixels in a frame adjacent to a current frame to produce a modified pseudo color image; (e) means for displaying said pseudo color image as modified by said first and second added predetermined portions of said error value; wherein said 256 color palette is formed from a color space designated Y.I.P. which is determined according to the following matrix operation: ##EQU3## wherein said R, G and B represent a red, blue, green color space.