blocky results in out of focus "background" areas

I've been doing some DVD encodes using MeGUI and the "HQ-Slower" profile from Sharky. Most of the resulting x264 video streams contain what I can only describe as blockiness areas which mostly occur in the background, out-of-focus areas of some scenes. Here is a section of a screenshot of my x264 encoded file (you have to get close to your monitor to see it but I assure you that it is VERY visible when viewed on a TV): Here is a section of a screenshot of the original VOB: : As you can see the blocky areas are present in original, but are much less noticeable then in the x264 file. I have tried altering the inloop settings from the standard 0,0 to sharky's -2,-1 and have even tried disabling the inloop filter all together. The results are the same. I have also tried messing with the "no skip p-frame" option since the balloon help for MeGUI suggests that, "Fast Skip detection increases speed but may cause slight blockiness in areas of solid colour or slight gradients such as dark scenes or sky." So if I enable "No Skip P-Frame" that should disable the option and thus disable the blockiness but when I compare the results with this box either checked or unchecked they appear the same. Any thoughts or suggestions? Thanks all!

Tried adaptive quantization?

Add noise on playback.

you need more bits, or more specifically, more bits allocated to that area. Or you can hide it rather well as per manao's suggestion, which is easier overall. As for allocating more bits, you can: o increase the total bitrate o use adaptive quantization, which is a custom option that sharktooth and a few others compile into their builds. Try --aq-strength 0.3 and see if it works.

@Dark Shikari: looked around for "adaptive quantization" but found no such option. @Manao: all I see is denoise filters.

Perhaps you need a few more pixels... 

Try .And make sure to check "mpeg2 deblocking" in "AviSynth Script Creator". You should get less blocks!

@delacroixp - yeah, I always overcrop and encode via anamorphic signalling and I usually use mkv since I like to keep the oroginal ac3 or transcode to vorbis. Thanks for the suggestion. @sealtoogreat - I'll tried using the deblocking option in avisynth, but it didn't do a whole lot of good: Code:

Mpeg2 deblocking always makes problems like this worse, you should never use it if you are having trouble with blocking. Gradfun2db, on the other hand, can sometimes help.

yes, if you use ffdshow's deband filer on playback, it should mostly remove the last vestiges of a problem. It's a very useful filter.