We pror.a;e a H.263-based video ceder with two-layer ocalability. The bare layer is ceded by using the default H.263 axling algorithms to achieve high compresred video data and the enhanced layer is axied by enhanced axling such as HVS-based quantization updating. The enhanced layer contains only arled refinement data for the OCT coefficients of the bare layer. Bitstream syntax and semantics for enhancement layer are designed and quantizer design using the HVS is pror.ooed. Data from the two layers are combined after inverse quantization and inverse OCT prcx:esses in the deaxier. We show with e~rirrental results that the pror.a;ed layered arlee achieves comparable picture quality with non-layered arlee at bitrates of 30 kbr;s or less. Overhead information for the bitstream layer can 00 limited to less than 0.5 kbits/frame.