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The existing macroblock-layer rate control schemes in the literature calculate quantization parameters of all macroblocks (MBs) in a frame in a raster scan order, and then encode the MBs in the same order. Actually, the quantization distortion is heavily dependent upon the coding order of MBs. This work investigates the relationship between quantization distortion and the coding order. Then we present a scheme where we modify the encoding order of MBs in TMN8 to favor the more complex MBs. We implement TMN8 and the modified version in H.263 video codec. The experimental results indicate that our scheme achieves average PSNR gain of 1.05 dB over TMN8. In addition, it performs better in buffer overflow and underflow, and the average bit rate achieved is closer to the target channel rate. The new rate control scheme is fully compliant to H.263 coding standard.