Pulse-width modulation (PWM) has recently become very popular power coding method in all-digital transmitter (ADT) architectures, which employ switch-mode power amplifiers (SMPA) for high power efficiency. Main drawback of PWM is high level of in-band harmonic distortion when digitally implemented, which limits its usage in transceivers realized for software defined radio. Furthermore, upconversion to RF frequency in such ADT systems is commonly done in digital domain. This introduces additional design difficulties, since significant amount of out-of-band harmonic noise, originating from PWM power encoding process, gets folded back into the input signal frequency band, further increasing the total in-band distortion. This paper presents a novel method for simultaneous multilevel power encoding and upconversion to RF frequency, by the means of a delta-sigma M hybrid architecture. It fully exploits time-domain characterization of multilevel carrier-based digital PWM, to both provide optimal parameter selection for delta-sigma M (which gives truly aliasing-free digital PWM), and to utilize harmonic nature of the PWM output for upconversion to digital RF frequency. Experiments with an arbitrary waveform generator are used to demonstrate effectiveness of the proposed novel power encoding scheme. The novel algorithm uses 3-level digital PWM and offers in-band SNR of more than -40dB.