The present invention relates to a method and apparatus for image compression in block units, and particularly to the image editor, color equalizer and error diffuser functions thereof. According to this image compression method, processing is done in blocks of 4.times.4 pixels. In each block, two representative colors and two interpolated colors that are gained by linear interpolation between the two representative colors, i.e., four colors in total, are used. One of these four colors is allotted to each pixel. The image editor function directly edits the reference relationship between the representative color and the color of the pixels. The color equalizer function performs encoding by taking differences in coloring between a TV and a PC monitor in consideration, thereby reproducing images similar to colors seen by the PC user on the TV of a game machine. The error diffuser function produces a pseudo realization of colors that do not correspond to the representative and interpolated colors by mixing different colors in pixel units.