An image processing method comprises receiving a raw color image as produced by an image sensor. A color image having a plurality of pixels is generated by processing raw image data from said raw color image, wherein pixels for which color values are absent in said raw image data are assigned color values derived from present color values in said raw image data. A sharpening term is generated by processing raw image data from said raw color image. Then, an improved color image is produced by combining said color image with said sharpening term. The raw color image may be a Bayer image, and the image processing method may be implemented in a cost and power efficient integrated circuit using limited memory.