In this paper, we propose a distributed video coding (DVC) paradigm based on lattice vector quantization in wavelet domain. In this framework, we use a fine and a coarse lattice vector quantizer to wavelet coefficients and the difference of two lattice quantizers is coded by turbo encoder. At decoder, side information is gradually updated by motion-compensated refinement. The refinement is built on partially decoded current frame and we give its matching strategy. Due to the refinement, burden of turbo encoding is cut down, bit rate is saved and the reconstruction is improved to some degree