This paper describes a hybrid grayscale compression system based on the discrete wavelet transform (DWT) and a polynomial coding technique for mixing quantization schemes to increase the compression ratio while maintaining quality. The proposed compression system consists of three main steps: first, decomposing an image using a three-level DWT; second, applying the 2-D linear polynomial coding technique to the approximation sub-band; and third, dividing the detailed sub-bands of each level into the Most Significant Value (MSV) and Least Significant Value (LSV), where the former is compressed using iterative scalar uniform quantization and the latter by soft quantization thresholding. For testing the performance of the suggested compression system, five standard images of size 256×256 pixels were adopted. The suggested technique showed superior performance in terms of reconstructed (decoded) image quality and compression ratio (gain), where the compression ratio is between 21–27 with a PSNR value between 36–38 dB and the compression ratio of JPEG is between 7–20 with a PSNR value between 33–37 dB.
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