A novel quality-scalable hybrid video coding scheme based on coefficient refinement and encoder quality constraints is developed. The technique, which also enables region-of-interest coding, is tested as a possible extension to the H.264 standard with excellent results. That is, the bit-rate increase typically encountered with scalable hybrid coding schemes is, for certain coding parameters, only small to moderate. The double- and triple-layer constellations of the system are shown to perform superior to other systems.