Both computation-intensive and bandwidth-intensive are primary characterizes in closed-loop video coding systems. With the rapid progress of semiconductor industry, the commutation-intensive issue can be properly handled by parallelism or pipeline processing. Therefore, bandwidth-intensive issue becomes more and more important in video coding. The embedded compression (EC) technology is widely applied to reduce frame memory size and bandwidth requirement. In this paper, an efficient EC algorithm, including ABC-based recompression, side-clipping mechanism and average-based prediction, is proposed. With proposed EC algorithm, the compression ratio (CR) of 50% can be guaranteed with minor PSNR degradation of 4.02% on average. Although EC is an additional function in video coding system, the extra encoding computation load is just 2.4% on average. Consequently, the proposed EC algorithm can be exploited to reduce the frame memory and bandwidth requirement in video coding systems.