Temporal frame interpolation is an important problem in many areas of modern video processing. However the task of accurate motion estimation for temporal interpolation is an open issue. In this paper we propose a new motion estimation algorithm for motion compensated frame interpolation. The developed algorithm is consistent with the conventional model of true motion and can be considered as a method of local minimization for the optimization problem defined within this model. The evaluation of the algorithm is performed for frame rate upconversion problem. Simulation results demonstrate performance comparable to existing frame rate up-conversion methods.