This paper presents a lightweight video sensor node for moving object surveillance using region-of-interest (ROI) based coding and an on-line multi-parameter rate controller. The proposed ROI-based coding scheme determines ROI blocks, pre-processes non-ROI blocks using bit-truncation, and encodes all blocks using Motion JPEG. The on-line rate controller modulates the parameters of the ROI-based coding scheme to match the encoded data rate and transmission data rate under the variations in channel bandwidth and input video content. The low-complexity hardware of the ROI-based coding scheme reduces computation energy, and the on-line rate controller minimizes buffer requirement. The sensor node is designed in 130nm CMOS and prototyped in a Virtex-V FPGA. Simulations show that, under the same ROI quality, the proposed approach reduces system energy by 61% compared to H.264/AVC.