1. A motion compensation apparatus for inter-frame prediction comprising: an area subdividing means for subdividing a reference image into sub-areas and producing a subdivided area, an inter-frame difference calculating means for producing inter-frame difference information between an input image and the reference image; a moving area detecting means for detecting, by reference to the inter-frame difference information, sub-areas in said subdivided area having inter-frame difference information of a predetermined character and designating said sub-areas as moving areas; an area integrating means for integrating the moving areas and outputting the integrated areas as moving object areas; motion estimating means for estimating inter-frame motion between the input and reference images for each of the moving object areas and outputting motion parameters representing motion of the moving object areas; and motion compensating means for conducting motion compensation for each of the moving object areas according to the motion parameters and producing and outputting a motion compensated prediction image.