Motion estimation and compensation combined with wavelet transformation has been beneficially applied to improve video compression efficiency and accuracy. Based on the similar motion structures between the decomposed subimages, wavelet domain video compression can be improved by means of the simplifications in motion field refinement as well as in motion vector representation. Although the utilization of the motion field correlations between the same orientational subbands can achieve better compression performance than that between the approximation subbands, the computational load has to be traded off. Since most of the energies are concentrated in the low resolution subbands while decreased in the high resolution subbands, by considering both the accuracy and complexity, an efficient approach, called level-refined motion estimation and subband compensation (LRSC) method is proposed. It realizes low-entropy coding in the subbands, while keeping low computational load in motion estimation, thus to achieve both temporal compression quality and computational simplicity.