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In this paper, an improved lattice filter structure is presented to model a two-dimensional (2-D) signal such as an image. The proposed structure generates a forward and a backward prediction error field at each stage of lattice structure, unlike other lattice structures [S.R. Parker et al., 1984][N. Tulu Onuk et al., 1994] wherein three or more backward prediction error fields are generated at each stage. This method is computationally efficient and possesses all the advantages of lattice algorithm. Simulation results show that the proposed lattice method results in better compression with lower computational cost than other lattice methods in literature [H.K. Kwan et al., 2001].