The present invention provides a method and a system for video stabilization in real time. The method comprises the steps of: estimating an optical flow from an previous image, Ii, to a current image, Ii+1; determining an Euclidean transformation, Fi, from the previous image, Ii to the current image, Ii+1, wherein the Euclidean transformation, Fi, comprises a product of rotation, Ri, and scaling, si, and translation, Ti; and transforming the current image, Ii+1, by applying the inverse of the Euclidean transformation, Fi, to the current image, Ii+1, in order to obtain stabilization. The transformation of the current image, Ii+1, is restricted by using Euclidean matrices Ai and Bi, wherein: Ai is used to store absolute frame transformation relative world frame coordinates, Ao is the identity matrix and Ai+1 is equal to AiFi−1 for i≧0 and Bi is used to store visualization window coordinate transformation.