W e consider a voice multiplexer which supports A T M packet voice trafic. This system model also applies to the multiplexing operation carried out at the output queue of each output queueing A T M switch. The voice multiplexer implements an encoding algorithm under which the voice quantization levels are dynamically adjusted according to the congestion status of the multiplexer. Using an embedded voice encoding scheme, a voice packet is encoded into lower and higher priority A T M cells. When high congestion conditions are observed, lower priority voice cells (which contain the least significant bats) are discarded. I n previous studies, the voice quality under a dynamic encoding algorithm has been described by the longterm average voice encoding rate (AER,). Due to the strong correlation properties exhibited b y the packet voice traffic, the voice degradation levels incurred under the employed dynamic voice encoding algorithms are not distributed uniformly among the voice sources. A s a result, the encoded voice stream for a source can exhibit severe short-term voice quality degradation, while the long-term AER, level remains satisfactory. To correct this situation, we introduce in this paper a "probabilistic" component in the cell-discarding process. A Voice Degradation Indicator (VDI) is introduced to measure the short-term voice quality degradation experienced by a voice stream. Through numerical examples, we adentify and compare the system performance under the deterministic and probabilistic algorithms. Under the same AER, levels, a probabilistic algorithm is shown to yield better short-term voice quality behavior as well as to improve the mean cell waiting time performance.