The very low bit rate MPEG4 codec, real time video streaming techniques and wireless LAN (WLAN) are considered as three main components for the next generation local area surveillance system to provide high compression rate, real time functionalities, error resilience and mobility. In this work, a review of the video coding techniques for wireless surveillance systems is presented. For the purpose of testing and analysis, a test-bed demonstration system with Wireless LAN is constructed. Real time MPEG4 encoded video is transmitted over an 11Mbps, 802.11b WLAN to mobile devices in an office-building environment sourced by a surveillance camera. The description of the system with the hardware and software tools used, experimental results and analysis of the system functionality and its features are presented.