The paper describes video codecs that provide the functionality of spatio-temporal scalability that enables construction of highly scalable video codecs. The coder exploits wavelet decomposition for intraframe coding and combined temporal prediction and spatial interpolation for P- and B-frames. In a two-layer system, the bitrate overhead measured relative to the single layer MPEG-2 bitstream varies about 10% for progressive television test sequences. The base layer bitstream constitutes about 40% of the overall bitstream. In multilayer systems, the bitrate ratio of consecutive layers is about 1:2.5. The base layer encoder is fully compatible with the MPEG-2 video coding standard. The paper comprises experimental results obtained for a two-layer system for progressive video sequence compression.