I fixed it by following the instructions on this thread:

http://www.wilderssecurity.com/showthread.php?p=1672814

Edit /etc/default/grub as root and add "i915.powersave=0" as a boot
option to the default kernel options. (Should be the line containing the
word "quiet", add it inside the quotes.)

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screen flicker ubuntu 10.04 ati x1400
https://bugs.launchpad.net/bugs/576555
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