Abstract: In a filmless digital camera, each image is individually evaluated and the compression applied in such manner as to retain maximum quality while fitting the data into the pre-assigned memory. For example, such a camera may have a stated image storage capacity for designated number of images, for example, thirty-two black and white images. In one embodiment of this invention, the image data is generated as analog data and converted into digital data. These data representing one complete image, are divided into small discrete blocks. Each of these blocks is compressed using one of the standard compression methods such as the discrete cosine transform (DCT). Each block of compressed data is then examined and a determination made as to the quality of an image resulting from such compression. If the quality falls below a pre-set standard, the block of data is compressed by an alternate method, for example, by differential coding.