In this work, we present a novel approach to the bit allocation problem that aims to minimize overall distortion subject to a bit rate constraint. The optimal solution can be found by the Lagrangian method with dynamic programming. However, the optimal bit allocation for block‐based interframe coding is practically unattainable because of the interframe dependency of macroblocks caused by motion compensation. To reduce the computational burden while maintaining a result close to the optimum, i.e., near optimum, we propose an alternative method. First, we present a partitioned form of the bit allocation problem: a “frame‐level problem” and “one‐frame macroblock‐level problems.” We show that the solution to this new form is also the solution to the conventional bit allocation problem. Further, we propose a bit allocation algorithm using a “two‐phase optimization technique” with an interframe dependency model and a rate‐distortion model.