The perceptible resolution and the number of gradations are both guaranteed, and an image is encoded at a high efficiency. An apparatus of the present invention is provided with a blocking circuit for dividing an input image into blocks, a quantization LUT for quantizing the image in a block, a quantization representative value LUT for obtaining a quantization representative value of the quantized image, a differential calculation circuit for obtaining the average value in the block of the differential between the pixel value in the block and the quantization representative value obtained by the quantization representative value LUT, an average value obtaining unit having an adding circuit and a dividing circuit, a first hierarchy encoder for encoding the image quantized by the quantization LUT, and a second hierarchy encoder for encoding the average value obtained by the average value obtaining unit.