The present invention comprises a system and method for controlling the rate a data encoder generates compressed data. The system and method are preferably implemented as program code stored and executed by a processor or computer that is interfaced to standard variable or constant bit rate encoders known in the art. The system preferably encodes and compresses video signals received from a camera, and controls the rate at which the compressed data is generated by the encoder so that storage capacity reserved for the compressed data will not be exceeded. The device preferably takes advantage of periods when the data generation rate is low to increase the quality of video data generated during periods of high activity.