Abstract: Continuous tone images, represented by original data files are compressed by (1) transforming by a lapped orthogonal transform the original file of data to generate a transform file of coefficients, (2) quantizing the transform coefficients, and (3) coding the quantized values to generate a compressed data file, the lapped orthogonal transform being arranged to compute all transform coefficients by means only of bit shifts, negations, and adds. In another aspect, the quantization and coding are performed on groups of transformed coefficients.