A method and apparatus for selecting a coding mode for a block of a current picture are disclosed. For example, the method selects a coding mode in accordance with a cost function, for coding the block, wherein the cost function comprises a coding distortion parameter and a number of coding bits parameter, wherein said coding distortion parameter is measured in accordance with at least one of: between a prediction residual and a reconstructed prediction residual, or between a transformed prediction residual and a dequantized transformed prediction residual, wherein the number of coding bits parameter is computed in accordance with at least one of: from a true number of compressed bits resulting from coding said block, directly from a plurality of bins, or directly from a plurality of quantized transform coefficients.