To overcome the problem of poor representation of the background noise, the present invention includes a noise parameter generator (40) which uses a weighted average of auto-correlation values of the input signal generated during the noise-analysis phase. The weighting function gives less weight to the auto-correlations during the first few frames (as they may contain speech) and more weight to frames towards the end of this phase. Also included, to overcome the bursty nature of comfort noise, is a comfort noise generator (50) which gradually changes the nature of the signal from speech to pseudo-random noise after the speech-burst. The comfort noise generator (50) of the present invention excites the auto-regressive filter corresponding to the noise model with a weighted combination of the past excitation and pseudo-random noise.