In this paper, we propose a new edge based finite state vector quantization method having better performance than conventional side-match finite state vector quantization. In our proposed scheme, each dCT transformed block is classified to 17 classes according to edge types. Each class has a different codebook based on its characteristis. Encoder classified each block to motion block or stationary block and constructed a merging map by using edge and motion information, and sent to decoder. We controled amoutn of bing bits transmitted with selecting modes accoridng to bandwidth of transmitting channel. Compared with conventional algorithms, H.263 and H.261 at low bit rate, our proposed algorithm shows better picture quality and good performance.