In this paper, we present a novel energy compaction method, called the selective block-wise reordering, which is used with SPIHT (SBR-SPIHT) coding for low rate video coding to enhance the coding efficiency for motion-compensated residuals. In the proposed coding system, the motion estimation and motion compensation schemes of H.263 are used to reduce the temporal redundancy. The residuals are then wavelet transformed. The block-mapping reorganization utilizes the wavelet zerotree relationship that jointly presents the wavelet coefficients from the lowest subband to high frequency subbands at the same spatial location, and allocates each wavelet tree with all descendents to form a wavelet block. The selective multi-layer block-wise reordering technique is then applied to those wavelet blocks that have energy higher than a threshold to enhance the energy compaction by rearranging the significant pixels in a block to the upper left corner based on the magnitude of energy. An improved SPIHT coding is then applied to each wavelet block, either re-ordered or not. The high energy compaction resulting from the block reordering can reduce the number of redundant bits in the sorting pass and improve the quantization efficiency in the refinement pass of SPIHT coding. Simulation results demonstrate that SBR-SPIHT outperforms H.263 by 1.28-0.69 dB on average for various video sequences at very low bit-rates, ranging from 48 to 10 kbps.