Abstract: An image-processing system for perceptual coding of an image is disclosed. Coding is accomplished through an analysis of human visual sensitivity to noise in halftone images and an analysis of one or more signals representing the image to be coded. These analyses determine levels of noise. A first image is encoded so as to produce encoded values without introducing noise which exceeds a determined level of noise. Analysis of human visual sensitivity is carried out under a set of user determined conditions comprising viewing distance and lighting. The encoded image is communicated and decoded to produce representation of the first image for display. As part of displaying the representation of the first image, a halftoning process is carried out. The halftoning process may comprise the interpolation of data values of the representation of the first image as well as the addition of micro-dither to the representation.