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In this paper, we propose a cross-layer optimization scheme for delivery of scalable video over variable bit-rate wireless networks, in particular 802.11 based wireless local area networks (WLAN). For scalable video streaming applications, the conventional solution to reduced throughput due to channel distortions is to reduce the video bitrate by dropping the higher enhancement layers of the scalable video. We show that video quality can be improved, without adding to traffic load, when the WLAN link adaptation scheme uses a temporal fairness criterion along with scalable video distortion estimates to adjust its physical (PHY) layer modulation and coding parameters used for delivering each video layer. We formulate the problem as an optimization problem for assigning different PHY modes to different layers of scalable video under temporal fairness constrains; the solution to this problem provides a set of PHY configuration parameters that achieve the highest possible video quality while meeting the admission control constraints. Performance evaluations demonstrate the effectiveness of our method and the accuracy of the models.