Compression of images that have masked or "don't care" regions which
are delineated by a binary image mask is achieved using "masked wavelet transforms."
A unique mask-dependent lifting scheme is used to compute invertible wavelet transforms
of the input image for use in encoding and decoding the input image. These mask-dependent
wavelet transforms are derived from the input image based on the masked regions
within the image. Masked wavelet coding automatically generates an appropriate
linear combination of available, unmasked, neighboring pixels, for both the prediction
and the update steps of "lifting" for each pixel. This pixel availability is then
used to change the wavelet function on a case-by-case basis as a function of the
mask by using a polynomial of degree k-;1 for interpolation in both the predict
and update steps of lifting where at least k unmasked neighboring pixel values
are available.