The ongoing increase of computing performance facilitates a higher algorithmical complexity in video coding systems. The decoder may be able to estimate or derive prediction parameters based on the previously decoded signal. In this paper we present an extension to H.264/AVC where the explicit coding of motion parameters is adaptively replaced by a template matching algorithm that is performed identically at the encoder and decoder. The decision between explicit coding and derivation of motion parameters is done by the rate-distortion optimised mode decision and coded into the bitstream. Compared to previous work, the provided scheme has been extended to bidirectional prediction (B pictures). Simulation results show an improved coding efficiency over a wide range of test sequences, especially for higher spatial resolutions. Keywords-- Video coding, Inter frame prediction, Template matching, Motion compensation, H.264/AVC