The handsfree mode is convenient when using a mobile phone in a vehicle. This mode brings the microphone away from the talkers mouth. As a consequence the speech signal picked up has low Signal to Noise Ratio. Thus, to improve the SNR a noise reduction method is employed. The proposed method is an improvement of the well-known spectral subtraction method which uses one SNR-depen-dent gain function to suppress the noise. The proposed method reduces the residual noise artifacts by using an adaptive averaging of the gain function. The adaptation is controlled by a spectral discrepancy measure, which is obtained by comparing the averaged noise spectrum and the current input signal spectrum. Experiments show a noise reduction of 10 dB with good noise quality and sig-nificantly low residual noise distortion. Sound results are presented athttp://www.its.hk-r.se/research.