A digital video signal encoder and method for detecting and encoding noise is disclosed. In a frame in a video signal, the variance of at least four macroblock luminance blocks is calculated. The Log2 of the minimum of these variances is determined. A running sum of the Log2 calculations is calculated and compared to a noise threshold to determine whether or not the frame contains noise. In one embodiment, a frame is determined to contain noise if the running sum is greater than a noise threshold and encodes the remaining portion of the frame as noise. In another embodiment, a current frame is determined to contain noise and is encoded as noise if the previous frame contained noise. The present invention may encode noise by overriding the original bit rate quantiser scale and/or removing at least one high frequency from a noise block using a DCT filter.