A novel compression algorithm for fingerprint images is introduced. Using wavelet packets and lattice vector quantization , a new vector quantization scheme based on an accurate model for the distribution of the wavelet coefficients is presented. The model is based on the generalized Gaussian distribution. We also discuss a new method for determining the largest radius of the lattice used and its scaling factor , for both uniform and piecewise-uniform pyramidal lattices. The proposed algorithms aim at achieving the best rate-distortion function by adapting to the characteristics of the subimages. In the proposed optimization algorithm, no assumptions about the lattice parameters are made, and no training and multi-quantizing are required. We also show that the wedge region problem encountered with sharply distributed random sources is resolved in the proposed algorithm. The proposed algorithms adapt to variability in input images and to specified bit rates. Compared to other available image compression algorithms, the proposed algorithms result in higher quality reconstructed images for identical bit rates.