An efficient image compression algorithm based on energy clustering and zer
o-quadtree representation (ECZQR) in the wavelet transform domain is propos
ed. In embedded coding, zeros within each subband are encoded in the framew
ork of quadtree representation instead of zerotree representation. To use l
arge rectangular blocks to represent zeros, it first uses morphological dil
ation to extract the arbitrarily shaped clusters of significant coefficient
s within each subband. The proposed encoding method results in less distort
ion in the decoded image than the line-by-line encoding method. Experimenta
l results show that the algorithm is among the most efficient wavelet image
compression algorithms.