Line special frequency (LSF) parameters have been widely used in low bit-rate speech coding due to their efficiency for representing the short-time speech spectrum. In this paper, a new distance measure based on the masking properties of human ear is proposed for quantizing LSF parameters whereas most conventional quantization methods are based on the weighted Euclidean distance measure. The proposed method derives the perceptual distance measure from the definition of noise-to-mask ratio (NMR) which has high correspondence with the actual distortion received in the human ear and uses it for quantizing LSF parameters. In addition, we propose an adaptive bit allocation scheme, which allocates minimal bits to LSF parameters maintaining the perceptual transparency of given speech frame for reducing the average bit-rates. For the performance evaluation, we has shown the ratio of perceptually transparent frames and the corresponding average bit-rates for the conventional and proposed methods. By jointly combining the proposed distance measure and adaptive bit allocation scheme, the proposed system requires only 770 bps for obtaining 95.5% perceptually transparent frames, while the conventional systems produce 89.9% at even 1800 bps.