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In this paper, we propose a scheme for segmentation of multitexture images. The methodology involves extraction of texture features using an overcomplete wavelet decomposition scheme called discrete M-band wavelet packet frame (DMbWPF). This is followed by the selection of important features using a neuro-fuzzy algorithm under unsupervised learning. A computationally efficient search procedure is developed for finding the optimal basis based on some maximum criterion of textural measures derived from the statistical parameters for each of the subbands. The superior discriminating capability of the extracted features for segmentation of various texture images over those obtained by several existing methods is established.