The new H.264 (MPEG-4 AVC) video coding standard can achieve considerably higher coding efficiency compared to previous standards. This is accomplished mainly due to the consideration of variable block sizes for motion compensation, multiple reference frames, intra prediction, but also due to better exploitation of the spatiotemporal correlation that may exist between adjacent Macroblocks, with the SKIP mode in predictive (P) slices and the two DIRECT modes in bipredictive (B) slices. These modes, when signaled, could in effect represent the motion of a macroblock (MB) or block without having to transmit any additional motion information required by other inter-MB types. This property also allows these modes to be highly compressible especially due to the consideration of run length coding strategies. Although spatial correlation of motion vectors from adjacent MBs is used for SKIP mode to predict its motion parameters, until recently, DIRECT mode considered only temporal correlation of adjacent pictures. In this letter, we introduce alternative methods for the generation of the motion information for the DIRECT mode using spatial or combined spatiotemporal correlation. Considering that temporal correlation requires that the motion and timestamp information from previous pictures are available in both the encoder and decoder, it is shown that our spatial-only method can reduce or eliminate such requirements while, at the same time, achieving similar performance. The combined methods, on the other hand, by jointly exploiting spatial and temporal correlation either at the MB or slice/picture level, can achieve even higher coding efficiency. Finally, improvements on the existing Rate Distortion Optimization related to B slices within the H.264 codec are also presented, which can lead to improvements of up to 16% in bit rate reduction or, equivalently, more than 0.7 dB in PSNR.