A method of compressing a current image of a sequence of images is disclosed. Firstly, the current image is transformed with a predetermined transform such as the DWT to provide a set of transform coefficients (step 2202). The method then retrieves (step 2303), for at least one transform coefficient of a current image, a predetermined number of bits, preferably two, of a corresponding transform coefficient of a previously compressed image of the sequence. The corresponding transform coefficient is truncated at a truncation bitplane and the retrieved bits are the least significant bits of the truncated corresponding transform coefficient. The transform coefficient of the current image is set to a new value that is a function of the retrieved bits (step 2306) and bits of the transform coefficients of the current image are stored for use in compressing one or more subsequent images of the sequence (step 2208).