The application relates to audio encoder and decoder systems. An embodiment of the encoder system comprises a downmix stage for generating a downmix signal and a residual signal based on a stereo signal. In addition, the encoder system comprises a parameter determining stage for determining parametric stereo parameters such as an inter-channel intensity difference and an inter-channel cross-correlation. Preferably, the parametric stereo parameters are time- and frequency-variant. Moreover, the encoder system comprises a transform stage. The transform stage generates a pseudo left/right stereo signal by performing a transform based on the downmix signal and the residual signal. The pseudo stereo signal is processed by a perceptual stereo encoder. For stereo encoding, left/right encoding or mid/side encoding is selectable. Preferably, the selection between left/right stereo encoding and mid/side stereo encoding is time- and frequency-variant.