Motion estimation is the most important module in H.264 video encoding algorithm since it offer the best compression ratio compared to intra prediction and entropy encoding. However, using the allowed features for inter prediction such as variable block size matching, multi-reference frames and fractional pel search needs a lot of computation cycles. For this purpose, we propose in this paper an Application Specific Instruction-set Processor (ASIP) solution for implementing inter prediction. An exhaustive full and fractional pel combined with variable block size matching search are used. The solution, implemented in FPGA, offers both performance and flexibility to the user to reconfigure the search algorithm.