This paper considers the average consensus problem for multi-agent networks with communication delays and limited data rate. The average consensus problem becomes much complicated when both delays and quantization are to be considered. In this paper, a distributed consensus protocol is proposed based on dynamic encoding and decoding. It is shown that for a connected network, as long as the time delays are bounded, the average consensus can be achieved with a finite-level quantizer. Moreover, merely one bit information exchange between each pair of adjacent agents at each time step suffices to guarantee the average consensus.