ISO/IEC MPEG-2 Test Model 5 (TM5) describes a rate control method which consists of three steps: bit allocation, rate control and modulation. There are basically two problems with the TM5 rate control. First, the quantization parameter for a macroblock is fully dependent upon the channel buffer fullness. Hence, macroblocks in a picture may not all be treated equally because of variations in buffer fullness, which may result in nonuniform picture quality. Secondly, the TM5 rate control does not handle scene changes properly because the target bit rate for a picture is determined based only on the information obtained from encoding of the pervious pictures. This paper presents a rate control approach which addressed these two problems associated with the TM5 rate control. A single quantization parameter is used for each picture, which guarantees that all the macroblocks in a picture are treated equally. To address the impact of scene changes on picture quality, we propose to code the first scheduled P picture after scene change as an I picture and the I picture in the following group of picture as a P picture. The simulation results demonstrate that a significant improvement is obtained using the proposed rate control.