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Projection onto convex sets has recently been suggested as an approach to time-varying image compression. In this paper, an image coding technique based on such an approach is developed. In particular, pixel and frequency domain information is combined in order to improve image quality over standard transform coding at given bit rates. The use of nonintersecting convex sets is shown to be optimum for two sets and a given error measure. Convex sets and projections are discussed in general and then in the context of image compression. Simulation results are presented for single frame images as well as for image sequences.