In this paper., we propose an efficient temporal DIRECT mode decision algorithm for H.264/AVC inter bi-predictive (B) frame video coding to improve the coding efficiency. In the suggested technique, in addition to the motion vector (MV) of the co-located block we also employ MVs of eight neighboring blocks for DIRECT mode decision. The best MV is selected for DIRECT mode decision based upon the sum of absolute bidirectional prediction differences (SABPD) criterion. No extra overhead is required in the proposed algorithm. The experimental results reveal that the proposed algorithm achieves average 0.16 dB PSNR gain or equivalently average 3.34% bit-rate saving, compared to the conventional DIRECT mode coding that only uses the MV of the co-located MB for DIRECT mode decision.