This paper describes a new algorithm for encoding spectral envelope in the time domain alias cancellation (TDAC) part of G.729.1. The spectral envelope and modified discrete cosine transform (MDCT) coefficients of the weighted code-excited linear predictive (CELP) coding error in lower-band and the higher-band input signal are encoded in the TDAC part. In order to reduce allocation bits for spectral envelope coding, a new algorithm using sub-band correlation between adjacent frames is proposed. In addition, to improve the quality of decoded signals, two bit allocation strategies using reduced bits from the proposed algorithm are proposed. The performance of the proposed algorithm is evaluated in terms of objective quality and bit reduction rates. Experimental results show that the proposed algorithm increases the quality of sounds significantly.