In night time surveillance, there is a possibility of having extremely bright and dark regions in some image frames of a video sequence. A novel non linear image enhancement algorithm for digital images captured under such extremely non-uniform lighting conditions is proposed in this paper. The new technique constitutes three processes viz. adaptive intensity enhancement, contrast enhancement and color restoration. Adaptive intensity enhancement uses a specifically designed nonlinear transfer function which is capable of reducing the intensity of bright regions and at the same time enhancing the intensity of dark regions. Contrast enhancement tunes the intensity of each pixels magnitude based on its surrounding pixels. Finally, a linear color restoration process based on the chromatic information of the input image frame is applied to convert the enhanced intensity image back to a color image.