The disclosure is directed to a method of color palette coding and an electronic device using the same method. The proposed method would include not limited to encoding, by using a processor, a bit stream to represent a color of a coding unit and storing the bit stream in a storage medium or transmitting the bit stream. The bit stream would include not limited to a binary bit representing a run flag, a N binary bit sequence representing up to 2N major colors in a coding unit with each of the possible values of the N binary bit sequence representing an unique major color index of N major color indices, and a M binary bit sequence representing up to 2M extended colors with each of the possible values of the M binary bit sequence representing an unique extended color index of M extended color indices.