A system and method of the present disclosure provides a region based error diffusion algorithm or function for reducing artifacts in images. The system and method utilizes knowledge of a region of interest (ROI) in an image and applies effects like dithering or error diffusion to the area or region that shows the artifacts, e.g., a banding phenomenon. The system and method provide for defining a region in at least one first image, the defined region having at least one artifact, tracking the defined region to at least one second image, and applying an error diffusion function to the defined region to mask the at least one artifact in the at least one first and second images.