The major causes of pseudo-contour in multi-level error diffusion (MED) halftone digital images were analyzed. A new method for producing multi-level halftone images by superposition of two level halftone images was put forward. The new multi-level halftone images were used to modify the images produced by traditional MED algorithm. The modified halftone images were basically free of pseudo-contour phenomena and kept the advantages of multi-level error diffusion.