A method of encoding display output of a computer using a block-based video encoder, such as H.264 includes receiving display update information, the display update information specifying at least one changed display area. Pixel data associated with the at least one changed area is also received. For each image block of an output frame to be encoded, the encoder determines whether the image block intersects one or more of the changed areas. A block skip indication is encoded for each image block not intersecting at least one changed area, and pixel data is encoded for intersecting blocks. An encoded output frame is then generated including the block skip indications and encoded pixel data.