In this paper, a novel inverse halftoning method is proposed to restore a continuous tone image from a given half-tone image. A set theoretic formulation is used where three sets are defined using the prior information about the problem. A new space-domain projection is introduced assuming the halftoning is performed using error diffusion, and the error diffusion filter kernel is known. The space-domain, frequency-domain, and space-scale domain projections are used alternately to obtain a feasible solution for the inverse halftoning problem which does not have a unique solution.