This paper presents an efficient and simple technique on reducing the false contour problem which often occurs in the JPEG decoded image. The false contour appears on JPEG decoded image while applying small quality factor. This problem induces unpleasant visual appearance. The proposed scheme exploits the usability of Halftoning-Based Block Truncation Coding (HBTC) approach on generating visual illumination to reduce the aforementioned problem. Three HBTC techniques, namely Ordered Dither Block Truncation Coding (ODBTC), Error Diffusion Block Truncation Coding (EDBTC) and Dot Diffused Block Truncation Coding (DDBTC), modify the DC components of all Discrete Cosine Transform (DCT) processed image on JPEG encoding stage. Experimental results show the proposed method superiority on JPEG false contour reduction. To further improve the JPEG decoded image quality, the proposed method utilizes the Gaussian kernel on replacing the DDBTC diffused kernel on spreading the error term. It assumes that the adjacent image blocks have a strong correlation in which high diffused coefficient should be applied on nearest adjacent neighbor. This paper extends the HBTC usability on JPEG false contour suppression.