Abstract: A matrix decoding system and method generates left, right, center and surround output signals by adding and subtracting weighted versions of first and second input signals. The output signals are generated using a variable matrix to combine the input signals. The variable matrix is controlled by steering control signals derived from a controller which generates the steering control signals responsive to the detected phase difference between the first and second input signals. The decoding system and method uses compressors to generate constant amplitude versions of the input channels prior to performing phase detection. Because the compressors generate constant amplitude signals, phase detection is not affected by an imbalance in channel power.