In most of the existing in-band wavelet video coding schemes, over-complete form of reference bands is used to solve the wavelet shift-variance problem on motion compensated temporal filtering (MCTF) in wavelet domain. It can more or less improve the coding efficiency of the in-band MCTF scheme. However, there is a dilemma always existing when the input video is decomposed into a low-pass band and several high-pass bands. If the temporal filtering in the lowpass band does not use any information from the high-pass bands, the coding efficiency will decrease significantly for the higher resolution reconstructed video. If the temporal filtering in the low-pass band does use data from the high-pass bands, it will bring serious drifting error when the high-pass bands are not available at the decoder. In this paper, for the latter case, we analyze when drifting errors occur and how they will propagate along the lifting structure for decoding at the lower resolution. Based on the analysis, we introduce two new inter coding modes at macroblock level for spatial low-pass band MCTF to make a better trade-off between the lower resolution drifting error and the high resolution
coding efficiency. Furthermore, we present the criterion to adaptively select the proper coding mode for each macroblock of spatial low-pass band. The experiment results show that our proposed scheme can dramatically reduce the drifting error about 0.4~2.6dB for different bit rates at low resolution, while for the high resolution, the performance loss is marginal.