A recently-developed object segmentation algorithm in the work of Kim et al. (2006) achieved real-time generation of object masks with reasonable accuracy. However, this algorithm wastes a memory space and requires unnecessary computations because it uses an entire image frame to extract a video object. This paper modifies the segmentation algorithm according to Kim et al. (2006) to enable block-level processing of video object segmentation. An image frame is partitioned into 8times8 blocks, each of which is processed independently with the segmentation information inherited from its left and upper neighboring blocks as well as the previous frame. Simulation results show that the block-level processing algorithm saves 36% of the memory size and speeds up the computation by 361%. As a result, the proposed algorithm can process QCIF-size video at over 20 fps with ARM7TDMI running at 100 MHz.