We describe a spectrally-filtered discrete-in-time downscaling data assimilation algorithm and prove, in the context of the two-dimensional Navier-Stokes equations, that this algorithm works for a general class of interpolants, such as those based on local spatial averages as well as point measurements of the velocity. Our algorithm is based on the classical technique of inserting new observational data directly into the dynamical model as it is being evolved over time, rather than nudging, and extends previous results in which the observations were defined directly in terms of an orthogonal projection onto the large-scale (lower) Fourier modes. In particular, our analysis does not require the interpolant to be represented by an orthogonal projection, but requires only the interpolant to satisfy a natural approximation of the identity.and let Q λ = I − P λ be the orthogonal complement of P λ . Now, given λ > 0 and I h define J = P λ P σ I h and E = I − J.(1.6) Note, although no additional orthogonality or regularity properties other than those appearing in Definition 1.1 have been assumed on I h , the above spectral filtering yields an operator J which is nearly orthogonal and has a range contained in D(A). The downscaling data assimilation algorithm studied in this paper may now be stated as Definition 1.2. Let U be an exact solution of (1.2) which evolves according to dynamics given by the semi-process S. Let t n = t 0 + nδ be a sequence of times for which partial