In this paper, we describe an audio-visual automatic speech recognition (AV-ASR) system that utilizes Facial Animation Parameters (FAPs), supported by the MPEG-4 standard, for the visual representation of speech. We describe the visual feature extraction algorithms used for extracting FAPs, which control outer- and inner-lip movement. Principal component analysis (PCA) is performed on both inner- and outer-lip FAP vector in order to decrease their dimensionality and decorrelate them. The PCA-based projection weights of the extracted FAP vectors are used as visual features. Multi-stream Hidden Markov Models (HMMs) and a late integration approach are used to integrate audio and visual information and train a continuous AV-ASR system. We compare the performance of the developed AV-ASR system utilizing outer- and inner lip FAPs, individually and jointly. Experiments were performed for different dimensionalities of the visual features, at various SNRs (0-30dB) with additive white Gaussian noise, on a relatively large vocabulary (approximately 1000 words) database. The proposed system reduces the word error rate (WER) by 20% to 23% relatively to audio-only ASR WERs. Conclusions are drawn on the individual and combined effectiveness of the inner- and outer-lip FAPs, the trade off between the dimensionality of the visual features and the amount of speechreading information contained in them and its influence on the AV-ASR performance.