A data compression system can operate in a number of different configurations, and wherein the bit rate produced by a given configuration can be controlled over some finite range by a control signal from a rate controller for smoothly transitioning between the configurations so that discontinuous jumps in bit rate and distortion are minimized is provided by determining thresholds on the feedback control signals, the thresholds being used to determine when to switch in or out of each configuration; the thresholds furthermore being determined from the intersection points of the rate distortion curves for the available configurations.