The H.264/AVC provides gains in compression efficiency of up to 50% over a wide range of bit rates and video resolutions compared to previous standards. However, these features incur a considerable increase in encoder complexity, mainly because of mode decision. In this paper, we propose an efficient method of fast Inter-skip mode selection algorithm for inter frame coding in H.264/AVC. Firstly, we select skip mode or inter mode by considering the temporal correlation. Secondly, we select variable block size on inter mode by considering the spatial correlation. Simulations show that the proposed method reduces the encoding time by 64% on average without any significant PSNR losses.