A transform encoder/decoder system employs a discrete transform, carefully designed analysis/synthesis window pairs, adaptive transform coefficient quantization, and adaptive bit allocation to encode high-quality music including broadcast and compact disc applications at low bit rates (128 kBits per second). The analysis/synthesis window pairs are carefully designed to achieve sufficient transform frequency selectivity so as to enhance the coders ability to utilize psychoacoustic masking effects. Asynthesis window in the decoder has characteristics such that the product of its response and that of an analysis window in the encoder produces a composite response which sums to unity for two adjacent overlapped sample blocks. Adjacent time-domain signal samples blocks are overlapped and added to cancel the effects of the analysis and synthesis windows. A technique is pro-vided for deriving suitable analysis/synthesis window pairs. In the encoder, discrete transforms analogous to a critically sampled single-sideband analysis/synthesis system generate the frequency-domain transform coefficients. Two transforms used are the Evenly-Stacked Time-Domain Aliasing Cancellation (TDAC) and Oddly-Stacked TDAC transforms. The transform coefficients are nonuniformly quantized by assigning a fixed number of bits and a variable number of bits determined adaptively based on psychoacoustic masking. A technique is described for assigning the fixed bit and adaptive bit allocations. The transmission of side information regarding adaptively allocated bits is not required. Error codes and protected data may be scattered throughout formatted frame outputs from the encoder in order to reduce sensitivity to noise bursts.