1. An improved error diffusion method for producing an output image from an input image having a set of digitized continuous-tone pixels, comprising the steps of: a) computing a visually perceived input value using a visual filter for a digitized continuous-tone input pixel; b) computing a visually perceived output value using a visual filter for each of the possible output levels; c) selecting the output level in response to the visually perceived input values and the visually perceived output value for each of the possible output levels according to an error criterion; d) determining an error signal between the visually perceived input value and the visually perceived output value for the selected output level; and e) weighting the error signal and adjusting the computed visually perceived input values for nearby pixels which have not been processed.