In this paper we propose a new Context-based Adaptive Variable Length Coding (CAVLC) algorithm by introducing the concept of Position Coding of the coefficients in the incoming quantized transformed sequences in H.264/AVC. The proposed algorithm removes the necessity of coding for two steps - Run Before and Total Zeros from the conventional CAVLC and thereby making it capable of achieving higher bit compression than the conventional one. Simulation results show that the proposed algorithm achieves 15.35% better bit compression compared to the conventional CAVLC. © 2012 IEEE.