The Optical Gravitational Lensing Experiment. Difference Image Analysis of LMC and SMC data. The Method

We describe the Difference Image Analysis (DIA) algorithms and software used to analyze four years (1997-2000) of OGLE-II photometric monitoring of the Magellanic Clouds, the calibration, the photometric error analysis, and the search for variable stars. A preliminary analysis of photometric errors is based on the field LMC_SC2. A full catalog of about 70,000 variable stars will be presented in a separate publication.