This invention describes a method for adjusting the loudness and the spectral content of digital audio signals in a real-time using warped spectral filtering. A warped processing module modifies a spectral content of a digital audio signal with a set of gains for a plurality of non-linearly-scaled frequency bands determined by a warping factor λ of a warped delay line. Warped delay line signals, generated by the warped delay line, are processed by a warped filter block containing multiple warped finite impulse response filters, e.g., Mth band filters, using individual warped spectral filtering in said plurality of the non-linearly-scaled frequency bands, which is followed by a conventional processing by a dynamic range control/equalization block. The present invention describes another innovation, that is embedding the warped processing module in a two-channel quadrature mirror filter (QMF) bank for improving processing efficiency at high sample rates.