An optical flow reference frame is generated that can be used for inter prediction of blocks of a current frame in a video sequence. A first (e.g., forward) reference frame and a second (e.g., backward reference frame) are used in an optical flow estimation that produces a respective motion field for pixels of the current frame. The motion fields are used to warp the reference frames to the current frame. The warped reference frames are blended to forms the optical flow reference frame.