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Speech enhancement methods using spectral subtraction have the drawback of generating an annoying residual noise with musical character. In this paper a frequency domain optimal linear estimator with perceptual post filtering is proposed which incorporates the masking properties of the human auditory system to make the residual noise distortion inaudible. The performance of the proposed enhancement algorithm is evaluated by the Segmental SNR, Log Spectral Distance (LSD) and Perceptual Evaluation of Speech Quality (PESQ) measures under various noisy environments and yields better results compared to the Wiener denoising technique.