The use of colors increases the information storage capacities in barcodes. Increasing the number of colors to encode information makes the decoding a challenging task due to the dependency of the surface color on the illuminant spectrum, viewing parameters, printing device and material, color fading in addition to other nuisance parameters. A popular solution is the use of a color palette of reference colors printed with barcode. The decoding becomes more challenging if a mobile phone as a decoding device is used due to the capture of images from different distances as well as angles. In addition, the barcode images are often blurry because of incorrect focus or camera shake. We present an iterative decoding algorithm that decodes the colors of all barcode patches across the barcode by minimizing the overall observation error. Our method is able to decode colors in presence of blur using a small number of colors yet ensuring high information density.Index Terms-Color barcode decoding, color mixing, blur problem