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A fast mode decision algorithm is proposed to solve the computation complexity for enhancement hierarchical-B pictures with adaptive inter-layer prediction in H.264/AVC scalable extension, scalable video coding. This method exploits the evaluated modes of the co-located reference macroblocks, which include the best and other abandoned modes, to compose a new candidate group for the current macroblock in adaptive inter-layer prediction of motion estimation according to their RD cost values. The candidate modes can be reduced by adjusting the size of the group in order to decrease the calculation. Experimental results show that the proposed algorithm reduces 35.49% on average with very limited decrease of encoding efficiency in terms of PSNR and bit rate.