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The lattice structure two-channel orthogonal filter bank structurally guarantees the perfect reconstruction (PR) property. Thus, it is eminently suitable for hardware realization even under severe coefficient quantization condition. Nevertheless, its frequency response is still adversely affected by coefficient quantization. In this paper, a novel recursive-in-width depth-first tree search technique is presented for the design of lattice structure PR orthogonal filter banks subject to discrete coefficient value constraint. A frequency-response deterioration measure is developed to serve as a branching criterion. At any node, the coefficient which will cause the largest deterioration in the frequency response of the filter when quantized is selected for branching. The improvement in the frequency response ripple magnitude achieved by our algorithm over that by simple rounding of coefficient values differs widely from example to example ranging from a fraction of a decibel to over 10 dB.