In this paper, a fixed point Variable Bit-Rate (VBR) Mixed Excitation Linear Predictive Coding (MELP(TM)) vocoder is presented. The VBR-MELP vocoder is also implemented on a TMS320C54x and it achieves virtually indistinguishable federal standard MELP quality at bit-rates between 1.0 to 1.6 kb/s. The backbone of VBR-MELP vocoder is similar to that of federal standard MELP. It utilizes a novel sub-band based voice activity detector in the back-end of encoder to discriminate background noise from speech activity. Since proposed detector uses only parameters extracted in the encoder, its computational complexity is very low.