Abstract: An echo canceller comprising a first wavelet decomposition block for decomposing a reference signal into a plurality of reference wavelet packets; a second wavelet decomposition block for decomposing an echo signal into a plurality of echo signal packets; an adaptive filter bank for receiving and filtering the reference wavelet packets and in response generating a plurality of filtered output packets replicating the echo signal packets; a plurality of subtracters for receiving and subtracting respective ones of the filtered output packets from the echo signal packets and in response generating and applying a plurality of error signals to the adaptive filter bank for modifying the transfer function of the adaptive filter bank; and a wavelet reconstruction block for receiving and reconstructing the error signals to form a residual signal from which the echo signal has been cancelled. Optimum wavelet filters for the best echo cancellation are provided, as are two wavelet echo cancellation structures.