Abstract: This study introduces an image filtering algorithm for degraded images with Gaussian noise. The stability, observability and controllability concepts from automatic control are formalized for evaluating image quality. The implementation of the developed algorithm is mainly based on first order difference equation. The proposed scheme is applied to gray scale and color degraded images by Gaussian noise. We also give a comparison between the proposed scheme and lowpass filtering technique. The results indicate that our method gives good performance with smoothing the background noise while preserving the edges and the fine details with less bullring, for gray scale and color images rather than the performance of lowpass filter.