A novel spatio-temporal filter for video denoising, which operates entirely in the wavelet domain, is proposed. For effective noise reduction, the spatial and temporal redundancies that exist in the wavelet domain representation of a video signal are exploited. First, a 2D discrete wavelet transform is applied to the input noisy frames. This is followed by a discrete cosine transform (DCT), which is applied to the temporal subband coefficients to minimise the redundancy among the consecutive frames. The DCT transformed, noise-free coefficients in the different wavelet domain subbands for the original image sequence are modelled using a prior having a generalised Gaussian distribution. On the basis of this prior, filtering of the noisy wavelet coefficients in each subband is carried out using a new, low-complexity wavelet shrinkage method, which utilises the correlation that exists between subsequent resolution levels. Experimental results show that the proposed scheme outperforms several state-of-the-art spatio-temporal filters in terms of both the peak signal-to-noise ratio and the visual quality.