A method of compressing digital image data is provided that includes, for each image data block in a plurality of image data blocks in the digital image data, transforming image data in the image data block to convert the image data to a low-frequency coefficient and a plurality of high-frequency coefficients, computing a predicted low-frequency coefficient for the image data block based on at least one neighboring image data block in the plurality of image data blocks, computing a residual low-frequency coefficient based on the predicted low-frequency coefficient and the low-frequency coefficient, quantizing the plurality of high-frequency coefficients, and entropy coding the residual low-frequency coefficient and the quantized high-frequency coefficients.