In this work, we propose a coding technique that is based on the generalized block prediction of the multiresolution subband decomposition of motion compensated difference image frames. A segmentation mask is used to distinguish between the regions where motion compensation was effective and those regions where the motion model did not succeed. The difference image is decomposed into a multiresolution pyramid of subbands where the highest resolution subbands are divided into two regions, based on the information given by the segmentation mask. Only the coefficients of the regions corresponding to the motion model failure are considered in the highest resolution subbands. The remaining coefficients are coded using a multiresolution vector quantization scheme that exploits inter-band non-linear redundancy. In particular, blocks in one subimage are predicted from blocks of the adjacent lower resolution subimage with the same orientation. This set of blocks plays the role of a codebook built from coefficients inside the subband decomposition itself. Whenever the inter-band prediction does not give satisfactory results with respect to a target quality, the block coefficients are quantized using a lattice vector quantizer for a Laplacian source.