Transmission of variable bit rate (VBR) video, because of the burstiness of VBR video traffic, has high fluctuation in bandwidth requirement. Traffic smoothing algorithm is very efficient in reducing burstiness of the VBR video stream by transmitting data in a series of fixed rates. We propose in this paper a novel segment-based bandwidth allocation algorithm which dynamically adjusts the segmentation boundary and changes the transmission rate at the latest possible point so that the video segment will be extended as long as possible and the number of rate changes can be as small as possible while keeping the peak rate low. Simulation results showed that our approach has small bandwidth requirement, high bandwidth utilization and low computation cost.