An image coding algorithm based on binary wavelet transform (BWT) and modified SPIHT was proposed.With the BWT,it eliminates spatial correlation and achieves compact representation of an image with integer precision,by mapping image pixels from real field to real field.Modified approach also presented to improve the poor visual quality of the traditional SPIHT algorithm.In our method,BWT coefficients are reordered according to their perceptual importance.The visually important coefficients are transmitted as early as possible,whereas those compression distortions are distributed in less visual significant regions.In this way,the visual qualities of decoded images are significantly improved without impairing the rate-distortion performance of the encoder.Experimental results show that the proposed algorithm achieves optimal compression performance and visual quality for images with various characteristics,as compared with other popular compression algorithms.