A low-rate video coding scheme which uses pruned tree-structured vector quantization (PTSVQ) is introduced. Designed by optimally growing the tree to a large rate and then pruning back to lower rates, PTSVQ is both a multirate and a variable rate coding technique. Since it has more flexibility than full-search VQ and fixed-rate tree-structured VQ, it is able to perform better. Furthermore, the tree structure reduces the computational complexity. Incorporated with the motion compensation and the quadtree decomposition techniques, the system achieves very good performance by exploiting the spatial and the temporal correlations of the images, as well as the regional statistics characteristic of the motion-compensated frame difference signal.<<ETX>>