Abstract: A method and apparatus for on-the-fly coding digital images using a line scanner, a boundary matcher/follower and a coder, and utilizing a small amount of processing and memory is disclosed. In an on-the-fly digital image coding method and apparatus feature points determining boundaries of regions of adjacent pixels of similar characteristics in each successive scanning line are sequentially detected and efficiently encoded in a chain-link manner, based on information concerned with feature points detected on a preceding scanning line. By this method, additional improvement in compression can be achieved with the use of predictive coding based on spatial stochastic correlation between successive feature points associated with a continuous boundary line.