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Bit-depth scalability is a new research field in the on-going scalable extension of the H.264/AVC (SVC) video coding standard. The key point is to accurately predict the enhancement layer, whose bit depth is 10 or more, from the 8 bit base layer. An improved inter-layer prediction scheme for bit-depth scalability was developed that ensures compatibility with the standard and improves the encoding efficiency. The scheme uses a “perfect” 8 bit picture with an adaptive neighbor filter whose coefficients are optimized by minimizing the block distortion between the 8 bit reconstructed picture and the “perfect” picture to achieve a more precise 10 bit prediction based on the filtered picture. Double arithmetic precision is used to further improve the encoding efficiency. Experimental results show that the scheme outperforms the recent joint video team (JVT) proposal in the joint scalable video model (JSVM).