A new method has been developed for the improved intensity assignment of severely or exactly overlapping Bragg reflections in a powder diffraction pattern. This fast iterative Patterson squaring (FIPS) method addresses, in particular, the systematic lack of small and large normalized intensities (IEI values) in severely overlapping powder data, which causes (a) the intensity statistics to be strongly acentric (even when the structure itself is centrosymmetric) and (b) the underestimation of strong structure-invariant relationships. Direct methods for structure determination are more likely to succeed with FIPS-improved data than with conventionally used equipartitioned data (ratio of lEI values for overlapping reflections set to 1.0). In the case of the molecular sieve AFR (in which 65 % of the reflections severely overlap), the ab initio structure solution was only possible after a redistribution of the intensities by the FIPS method.