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In this paper we propose a new fast mode decision (FMD) algorithm to reduce the computational load of the motion estimation (ME) process of the new video coding standard H.264/AVC main profile. The algorithm firstly computes the skip/direct mode (respectively for P and B-frames), for all macroblocks (MBs), and then decides, for each MB if no mores modes are needed. This decision is based on the generation of predictions of the expected PSNR of the frame to be encoded. These predictions are performed with the distortion cost obtained for skip/direct mode jointly with the average distortion cost obtained for the previous encoded frames. Results show that the computational load have been dramatically reduced, with average encoding time saving of-36.38%, while nearly negligible loss of coding efficiency.