Speech coding techniques have been vastly exploited in telecommunication applications in recent years Due to lower sensitivity to channel errors, in such applications, usually fixed rate coding is employed. However because of their limitations on using fixed frame lengths, fixed rate codingalgorithms are not capable to reduce the existing redundancy in speech signals very efficiently. This paper presents a method which exploits the abilities of waveform interpolation coding technique in producing high quality speech in a variable rate scheme to present a very efficient and high quality compression algorithm