A novel coding scheme for improving reconstructed audio quality at 48 Kbits/s for MPEG-4 AAC based codec is introduced. In contrast to the fixed subband widths in an MPEG-4 codec, a pre-defined configuration is selected and signaled to the decoder in each frame. The selected configuration groups together appropriate number of neighboring samples to form subbands dynamically and improves the efficiency of the two loop search procedure within the encoder. This results in reducing the Noise to Mask ratio and improves the output quality. Performance analysis of the proposed codec through Subjective listening tests according to ITU-T recommendation BS-1116 indicates a significant improvement compared to the standard MPEG-4 AAC codec. The paper concludes with a discussion of future research directions.