Three-dimensional (3-D) video compression using wavelets decomposition along the temporal axis dictates that a number of video frames must be buffered to allow for the temporal decomposition. Buffering of frames allows for the temporal correlation to be made use of, and the larger the buffer the more effective the decomposition. One problem inherent in such a set up in interactive applications such as video conferencing, is that buffering translates into a corresponding time delay. We show that 3-D coding of such image sequences can be achieved in the true sense of temporal direction decomposition but with much less buffering requirements. For a practical coder, this can be achieved by introducing an approximation to the way the transform coefficients are encoded. Applying wavelet decomposition using some types of filters may introduce edge errors, which become more prominent in short signal segments. We also present a solution to this problem for the Daubechies (1988) family of filters.