The MPEG-2 Test Model 5 (TM5) algorithm describes a rate control method which consists of three steps: bit allocation, rate control and modulation. In TM5, however, buffer overflow and picture quality degradation may occur at the end of the GOP because the target bits and the actual coding bits for each picture do not match well. This paper presents a new bit rate control algorithm for matching the target and the actual coding bits based on accurate bit allocation. The key idea of the proposed algorithm is to determine quantization parameters which enable us to generate the actual coding bits close to the target bits for each picture, while improving the picture quality. The proposed algorithm exploits the relationship between the number of the actual coding bits and the number of the estimated bits of the previous macroblock within a picture.