Abstract: A data compression system includes an image preprocessor for generating a digitized, formatted set of pixels which is passed to an image transformer. The image transformer generates a set of wavelet coefficients from the formatted set of pixels via a series of one-dimensional wavelet transforms. A compression processor selects a subset of the wavelet coefficients for retention based on areas of interest in the original image and the position of coefficients within the set of coefficients. The compression processor then builds a compressed image file using a coefficient location identifier to reduce the size of the addresses that indicate the position of the selected coefficients within the set.