We address the problem of motion estimation in images operating in the frequency domain. A method is presented which extends phase correlation to handle multiple motions present in an area. Our scheme is based on a novel Bilateral-Phase Correlation (BLPC) technique that incorporates the concept and principles of Bilateral Filters retaining the motion boundaries by taking into account the difference both in value and distance in a manner very similar to Gaussian convolution. The optical flow is obtained by applying the proposed method at certain locations selected based on the present motion differences and then performing non-uniform interpolation in a multi-scale iterative framework. Experiments with several well-known datasets with and without ground-truth show that our scheme outperforms recently proposed state-of-the-art phase correlation based optical flow methods.