Abstract: Image compression is currently a prominent topic for both military and commercial researchers. Due to the rapid growth of digital media and the subsequent need for reduced storage and to transmit the image in an effective manner Image compression is needed. Image compression attempts to reduce the number of bits required to digitally represent an image while maintaining its perceived visual quality. This study concentrates on the compression of the image using the new sub-band coding algorithm of wavelet transform. This study also deals with a visually lossy contrast-based quantization algorithm for wavelet-based compression of natural image. The DWT is applied for various images and the compression ratios are obtained. The performance of this method is compared with the available compression technique, showing good agreements.