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The concept of fast KL transform coding introduced earlier ,  for first-order Markov processes and certain random fields has been extended to higher order autoregressive (AR) sequences and practical images yielding what we call recursive block coding (RBC) algorithms. In general, the rate-distortion performance for these algorithms is significantly superior to that of the conventional block KL transform algorithm. Moreover, these algorithms permit the use of small size transforms, thereby removing the need for fast transforms and making the hardware implementation of such coders more appealing. This improved performance has been verified for practical image data and results in suppression of the block-boundary effect commonly observed in traditional transform coding techniques. This is illustrated by comparing RBC with cosine transform coding using both one- and twodimensional algorithms. Examples of RBC encoded images at various rates are given.