1. A system for displaying on a video display a pseudo color image formed from a true color image made of plurality of pixels using a 256 color palette 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 predetermined portions 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 displaying said pseudo color image as modified by said 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: ##EQU2## wherein said R, G and B represent a red, blue, green color space.