In this paper, we propose a method for dynamic selection of unrestricted motion vector(UMV) or default prediction mode(DPM) in H.263 bit stream. For this, we use the error of compensated image and the magnitude of motion vector. In the proposed strategy, the UMV mode is dynamically applied in a frame according to average magnitude of motion vector and error of compensated image. This scheme has improved the quality of image compared to the fixed mode UMV or DPM only. Number of searching points are greatly reduced when comparing to UMV The proposed method is more profitable to long video sequences having camera movement locally.