Sprite is an efficient and concise method for the representation of a background video object, which is typically compressed with the MPEG-4 object-based coding technique. Due to the property of a background video object, a sprite image often comprises many flat and texture-correlation regions. In order to fully exploit spatial redundancy, the paper proposes an idea of utilizing directional spatial prediction to improve sprite coding. In general, the generated sprite is not a rectangular image. Since traditional spatial prediction techniques have difficultly dealing with those contour blocks, a padding technique is first proposed to fill transparent regions in contour blocks by considering both the correlation of pixels within a block and the correlation among neighboring blocks. Then every block is encoded by the INTRA coding technique developed in H.26L. Experimental results show that the propose sprite coding scheme outperforms the MPEG-4 object-based coding by up to 3.0 dB at low bit rates. Furthermore, the proposed scheme essentially extends directional spatial prediction from frame-based coding to arbitrary shape object coding.