In this paper, a temporally adaptive layered image sequence coding technique employing H.261 is proposed. In the proposed technique, the frame rate of the base layer is adjusted according to the temporal activity measure based on the rate-distortion function. The base layer is encoded using the H.261. Then, the full frame-rate error image is formed by comparing the original image and the interpolated version of the reconstructed base layer image. The enhancement layer is algo encoded using H.261 but with leaky prdiction to provide robust error resilience. The simulation results show that the proposed technique provides better performance than the twin-H.261 with leaky prediction in both the fixed-rate and variable-rate systems.