Abstract: A method and system for compressing and decompressing a sequence of image frames is disclosed. According to the disclosed embodiments of the invention, the compression process includes an intraframe decomposition process (24, 24') performed upon each frame in both the row and column directions, including an m.sup.th order averaging and differencing operation (56, 62). Each frame is then combined with others in an adjacent pair or group of four by way of an interframe decomposition (28). Quantization (30) is then performed, preferably by division of each coefficient by a quantizer (.rho.) associated with the one of the frequency component subbands containing the coefficient. Reconstruction of the compressed frames is accomplished by performing the inverse of the compression process. According to the disclosed embodiments, either the compression or decompression processes and systems performs Cholesky filtering (60, 66; 170, 172), preferably in a recursive manner by way of forward and backward filtering.