We present a method for extracting local visual perceptual cues and its application for rate control of videophone, in order to ensure the scarce bits to be assigned for maximum perceptual coding quality. The optimum quantization step is determined with the rate-distortion model considering the local perceptual cues in the visual signal. For extraction of the perceptual cues, luminance adaptation and texture masking are used as the stimulus-driven factors, while skin color serves as the cognition-driven factor in the current implementation. Both objective and subjective quality evaluations are given by evaluating the proposed perceptual rate control (PRC) scheme in the H.263 platform, and the evaluations show that the proposed PRC scheme achieves significant quality improvement in block-based coding for bandwidth-hungry applications.