A video signal encoder uses an encoding system such as that developed by the Moving Picture Experts Group (MPEG). A key component of this encoding system reduces the number of bits required to encode the video signal. Apparatus according to the present invention, filters out high diagonal frequencies in the spatial domain of a video signal. Specifically, two dimensional (2-D) filtering is performed on frames of a video signal to filter out high diagonal spatial frequencies before the video signal is separated into blocks. These blocks may be encoded in fewer bits due to elimination of noise components and other image components having high diagonal frequencies.