This paper presents a robust scalable video coding scheme with leaky prediction, suitable for time-varying error-prone channels, such as the Internet or wireless channels. The proposed scheme shows how leaky prediction can be utilized for efficient motion-compensated video coding, as well as for robust video transmission over packet erasure networks. We show that leaky prediction with a temporal prediction coefficient of less than one increases the robustness in the presence of errors significantly, while introducing only a small loss in coding efficiency in the error-free case. The proposed scalable video coding scheme is combined with a prioritized ARQ scheme in which higher priority is assigned to more important layers. Our simulation results demonstrate graceful degradation with an increasing error rate over wireless links.