Abstract: Method and system for encoding digital speech information to characterize spoken human speech with an optimally reduced speech data rate while retaining speech quality in the audible reproduction of the encoded digital speech information. Markov modeling is applied to quantized speech parameters to represent their time behavior in a probabilistic manner. This is accomplished by representing the quantized speech parameters as finite state machines having predetermined matrices of transitional probabilities from which the conditional probabilities as to the quantized speech parameter values of successive speech data frames are established.