A system for estimating noise levels in a data stream includes a calculator for determining DC and AC values of DCT coefficients in coded data blocks, where the coded data blocks are within a strip of an image divided into multiple strips. A classifier is included for forming a plurality of luminance levels, based on the calculated DC values. A selector is included for selecting coded data blocks having minimum AC values, as computed by the calculator. At least two coded data blocks are selected for each of the luminance levels. After decoding, another calculator is used for determining a variance for each of the decoded data blocks corresponding to the selected coded data blocks in each strip. An order statistic filter is included for ordering the decoded data blocks in each strip based on the calculated variances. Another selector selects one of the decoded data blocks, for each of the luminance levels.