Over recent decades the role of image in the communication of information hasrngrown steadly. Advances in technologies underlying the capture, transfer, storage, andrndisplay of images as a means of communicating information has become technologicallyrnand economically feasible. More importantly, images are in many situations an extremelyrnefficient means to communicate information.rnThe approach in this thesis work is to modify conventional motion compensationrnprediction so as to improve or optimize the error resilience performance of the over allrnsystem; motion compensated prediction in conventional video coders is based on thernencoder reconstruction of the previous frame where motion is estimated so as tornminimize the encoder prediction error. Such design paradigm optimizes the prediction atrnthe encoder and ignores the effect of packet loss.rnThe thesis work is based on the literature surveys, the simulation results arernbased on the H.263 software and the necessary computation is done on MATLAB. Thernmodified (source-channel prediction) scheme achieves better error resilience performancernand better over all R-D trade off than its conventional counter part.