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While the H.264 standard offers improved compression efficiency compared with prior video coding standards, this efficiency arises at the cost of significant complexity. We present a reduced complexity coding algorithm which estimates, prior to coding each macroblock, whether the coder would choose the skip or code mode for the macroblock. Computation savings are achieved, since pre-coding of skipped macroblocks is avoided. The decision to skip a macroblock is based on estimating and modelling mode cost differences, and employing these models in a MAP framework. Results are shown which indicate that for low-activity sequences savings of over 70% in computation time can be achieved with little or no decrease in video quality.