A method for line-based video rate control is provided. The line based video rate control method includes system feedback to change system operating parameters, including on a packet-by-packet basis and also on a line-by-line basis. Also provided is a method for line-based compression. The method includes basic elements of an arithmetic coder to improve Golomb coding performance. By inverting operations in the method for line-based compression, the corresponding decoder can be obtained. The method also provides a heuristic-driven method for generating prediction residuals from quantized data, wherein prediction is driven in the direction of maximum correlation so that it is unnecessary to supply the decoder with additional data specifying this direction at each array element.