A method decodes blocks in pictures of a video in an encoded bitstream by storing previously decoded blocks in a buffer. The previously decoded blocks are displaced less than a predetermined range relative to a current block being decoded. Cached blocks are maintained in a cache. The cached blocks include a set of best matching previously decoded blocks that are displaced greater than the predetermined range relative to the current block. The bitstream is parsed to obtain a prediction indicator that determines whether the current block is predicted from the previously decoded blocks in the buffer or the cached blocks in the cache. Based on the prediction indicator, a prediction residual block is generated, and in a summation process, the prediction residual block is added to a reconstructed residual block to form a decoded block as output.

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