We present an algorithm for data compression of grey level images based on coding geometric and grey level information of the contours in the image. From this sketch information alone an intelligible grey level image can be reconstructed. Compression ratios will be dependent on the amount of detail in the image and the quality of the reconstruction. For a human face image we present results with compression ratio in the range 60–75, with an intelligible reconstructed image. The reconstructed image lacks texture information however. This is therefore coded separately by taking the residual between the original and the sketch reconstructed image and using the Laplacian pyramid coding algorithm. The pyramid coding seems to be a natural complement to the sketch coding algorithm since the resolution of the texture to be added can be varied easily by just adding certain levels of the pyramid coded residual. Compared to traditional wave form coding the use of sketch coding only, seems to be advantageous mainly at high compression ratios in the range 30–75 giving intelligible reconstructed images. For lower compression ratios and high quality reconstructions the advantages are correspondingly less. Using sketch coding and residual pyramid coding gives visible improvement over a larger range of compression ratios compared to pyramid coding only. The main factor that limits the full exploitation of the possibilities of a sketch based coding algorithm seems to be the extraction of the perceptually essential sketch information. If this can be achieved in a more effective way the advantages compared to wave form coding will certainly increase.