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This paper describes a localization system for mobile robots moving in dynamic indoor environments, which uses probabilistic integration of visual appearance and odometry information. The approach is based on a novel image matching algorithm for appearance-based place recognition that integrates digital zooming, to extend the area of application, and a visual compass. Ambiguous information used for recognizing places is resolved with multiple hypothesis tracking and a selection procedure inspired by Markov localization. This enables the system to deal with perceptual aliasing or absence of reliable sensor data. It has been implemented on a robot operating in an office scenario and the robustness of the approach demonstrated experimentally