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H.264 coding standard offers several coding modes, including intra mode and inter prediction mode with different block sizes. Since intra mode does not need reference from previous frames, in packet loss environment, intra mode can be a good choice to stop error propagation and enhance decoded video quality. To achieve best coding efficiency, such best mode decision is often made upon optimizing rate distortion (RD) constraints. Unfortunately, this RD optimization process incurs a considerable complexity increase of the encoder. To solve the problem, we propose a fast motion estimation and mode decision algorithm for H.264 video coding in packet loss environment. Unlike previous algorithms, our method takes advantage of channel distortion estimation as assistance to decide if an early termination of existing coding mode choices is necessary. Experiment results show that, compared with error resilient coding method proposed in the work of Stockhammer et al. (2002) and Yuan Zhang et al. (2004), the proposed algorithm can enhance speed up to 10 times while maintaining similar average picture quality.