Based on experiments with the locust olfactory system, we demonstrate that model sensory neural networks with lateral inhibition can generate stimulus specific identity-temporal patterns in the form of stimulus-dependent switching among small and dynamically changing neural ensembles (each ensemble being a group of synchronized projection neurons). Networks produce this switching mode of dynamical activity when lateral inhibitory connections are strongly non-symmetric. Such coding uses 'winner-less competitive' (WLC) dynamics. In contrast to the well known winner-take-all competitive (WTA) networks and Hopfield nets, winner-less competition represents sensory information dynamically. Such dynamics are reproducible, robust against intrinsic noise and sensitive to changes in the sensory input. We demonstrate the validity of sensory coding with WLC networks using two different formulations of the dynamics, namely the average and spiking dynamics of projection neurons (PN).