Abstract: A method and apparatus for allocating transmission bits for use in transmitting samples of a digital signal. An aggregate allowable quantization distortion value is selected representing an allowable quantization distortion error for a frame of samples of the digital signal. A set of samples are selected from the frame of samples such that a plurality of the selected samples are greater than a noise threshold. For each sample of the set, a sample quantization distortion value is computed which represents an allowable quantization distortion error for the sample. The sum of all sample quantization distortion values is approximately equal to the aggregate allowable quantization distortion value. For each sample of the set, a quantization step size is selected which yields a quantization distortion error approximately equal to the sample's corresponding quantization distortion value. Each sample is then quantized using its quantization step size.