A multi-resolution motion estimation scheme is proposed for tracking of the true 2D motion in video sequences for motion compensated image interpolation. The proposed algorithm utilizes frames with different resolutions and adaptive block dimensions for efficient representation of motion. Firstly, motion vectors for each block are assigned as a result of predictive search in each pass. Then, the outlier motion vectors are detected and corrected at the end of each pass. Simulation results with respect to different quality metrics reveal that the motion fields generated by the proposed algorithm is of high quality, when compared with state-of-the-art motion estimation algorithms in literature.