A new image coding method using predictive classified vector quantisat
ion (PCVQ) is proposed. The image is first divided into different subs
ources using a two-stage classification method based on the optimum th
ree-level block truncation coding technique. Each subsource is then ve
ctor quantised using different codebooks. Simulation results show that
an improvement of about 2 to 6dB in PSNR performance over the JPEG sc
heme is obtained at the rate of 0.4375bit/pixel.