Block truncation coding (BTC) is an efficient technology for image compression. An improved BTC algorithm, namely ordered dither block truncation coding (ODBTC), is presented in this study. In order to provide better image quality, the void-and-cluster halftoning is combined with the BTC. The ODBTC results show that the image quality is improved when it is operated in high coding gain applications. Another feature of the ODBTC is the dither array look up table (LUT), which significantly reduces the complexity compared to the BTC.