The motion compensated coding (MCC) technique, which exploits the temporal redundancies in the moving images with the motion estimation technique,is one of the most popular techniques currently used. Recently, a variable block size(VBS) motion estimation scheme has been utilized to improve the performance of the motion compensted coding. This scheme allows large blocks to the used when smaller blocks provide little gain, saving rates for areas containing more complex motion. Hence, a new VBS motion estimation scheme with a hierarchical structure is proposed in this paper, in order to combine the motion vector coding technique efficiently. Topmost level motion vector, which is obtained by the gain/cost motion estimation technique with selective motion prediction method, is always transmitted. Thus, the hierarchical VBS motion estimation scheme can efficiently exploit the redundancies among neighboring motion vectors, providing an efficient motion vector encoding scheme. Also, a restricted search with respect to the topmost level motion vector enables more flexible and efficient motion estimation for the remaining lower level blocks. Computer simulations on the high resolution image sequence show that, the VBS motion estimation scheme provides a performance improvement of 0.6~0.7 dB, in terms of PSNR, compared to the fixed block size motion estimation scheme.