Abstract: An audio coder/decoder ("codec") that is suitable for real-time applications due to reduced computational complexity, and a novel adaptive sparse vector quantization (ASVQ) scheme and algorithms for general purpose data quantization. The codec provides low bit-rate compression for music and speech, while being applicable to higher bit-rate audio compression. The codec includes an in-path implementation of psychoacoustic spectral masking, and frequency domain quantization using the novel ASVQ scheme and algorithms specific to audio compression. More particularly, the inventive audio codec employs frequency domain quantization with critically sampled subband filter banks to maintain time domain continuity across frame boundaries. The input audio signal is transformed into the frequency domain in which in-path spectral masking can be directly applied. This in-path spectral masking usually results in sparse vectors.