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This paper presents a region-based video codec, which is compatible with the H.263+ standard, and its associated rate control algorithm for low variable-bit-rate (VBR) video. The proposed region-based coding scheme is a hybrid method that incorporates traditional block DCT coding as well as object-based coding. To achieve this, we adopt H.263+ as the platform, and develop a fast macroblock-based segmentation method to implement the new region-based codec. The associated rate control solution includes rate control in three levels: encoding frame selection, frame-layer rate control and macroblock-layer rate control. The goal is to improve human visual perceptual quality at low bit rates. The efficiency of the proposed rate control algorithm applied to the region-based H.263+ codec is demonstrated via several typical test sequences.