1. A method for encoding motion-compensated video data comprising generating, for a current frame, a high-pass wavelet coefficient based on a non-linear function of one or more pixels in a temporally adjacent frame, the function being of the form: f = ∑ m ⁢ ⁢ ∑ n ⁢ ⁢ β ⁡ ( m , n ) ⁢ F i ⁡ ( x + ⌊ Δ ⁢ ⁢ x m ⌋ + m , y + ⌊ Δ ⁢ ⁢ y n ⌋ + n ) , wherein ƒ represents the result of the function, β(m,n) represents an interpolation factor applied to a pixel in the temporally adjacent frame, the pixel in the temporally adjacent frame being identified by m and n, F i denotes the temporally adjacent frame, (x,y) represents coordinates of a pixel in the current frame corresponding to the high-pass wavelet coefficient, (Δx m ,Δy n ) represents the motion vector relating the pixel (x,y) in the current frame to the pixel in the temporally related frame, and └Δx m ┘ and └Δy n ┘ represent integer parts of Δx m and Δy n , respectively.