In this paper, we propose a spectrally efficient frequency-domain channel estimation scheme suitable for training sequence inserted single-carrier (TS-SC) block transmission using frequency-domain equalization (FDE). The proposed scheme performs the channel estimation in two steps and allows the use of shorter TS (but, longer than the channel length) than the conventional channel estimation schemes. In the first step, the received TS having cyclic property is constructed for performing frequency-domain channel estimation and the improved channel estimate is obtained by using simple averaging of noisy channel estimates. In the second step, the maximum likelihood channel estimation is carried out iteratively by using both the TS and the estimated symbol sequence obtained in the first step. It is shown by computer simulation that the proposed 2-step frequency-domain iterative channel estimation scheme achieves a bit error rate (BER) performance close to perfect channel estimation even in a relatively fast fading environment.