In this paper, we propose a novel method of computing the optical flow using the Fourier Mellin Transform (FMT). Each image in a sequence is divided into a regular grid of patches and the optical flow is estimated by calculating the phase correlation of each pair of co-sited patches using the FMT. By applying the FMT in calculating the phase correlation, we are able to estimate not only the pure translation, as limited in the case of the basic phase correlation techniques, but also the scale and rotation motion of image patches, i.e. full similarity transforms. Moreover, the motion parameters of each patch can be estimated to subpixel accuracy based on a recently proposed algorithm that uses a 2D sinc function in fitting the data from the phase correlation output. We also improve the estimation of the optical flow by presenting a method of smoothing the field by using a vector weighted average filter. Finally, experimental results, using publicly available data sets are presented, dem...