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We propose a video streaming scheme over wireless LAN using novel rate-distortion optimized data partitioning scheme and prioritized adaptive packet transmission. The new algorithm enables DCT data partitioning up to the DCT block level without rate overhead using backward adaptation. For channel adaptation, we selectively drop enhancement layer packets when the channel throughput is not sufficient. Real video streaming experiments with 802.11b testbed have demonstrated excellent performance of the algorithm under severe interference such as microwave oven.