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An efficient coding system is required for immersive teleconference to transmit stereo video. We propose a novel stereo video coding system by exploiting mesh-based disparity estimation and compensation scheme to achieve high coding efficiency and view synthesis ability. Based on the base-layer-enhance-layer structure, this system can provide stereoscopic scalability and compatibility to standards. With considering asymmetric spatial resolution property, good subjective quality can be achieved in ultra low bitrate situation. A novel fast disparity estimation algorithm named as two-stage iterative block and octagonal matching (TS-IBOM) algorithm is also proposed for this system. Experiments show that the proposed disparity estimation algorithm can generate accurate disparity vectors quickly. It is also shown that the proposed coding system has better coding efficiency than MPEG-4 simple profile and temporal scalability tool. The ultra low bitrate of 69 Kbps can be reached to encode 384/spl times/192 60 fps stereo video.