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We present hybrid loss protection as a new channel coding and packetization scheme for image transmission over nonprioritized lossy packet networks. The scheme employs an interleaver-based structure, and attempts to maximize the expected peak signal-to-noise ratio (PSNR) at the receiver given the constraint that the probability of failure, i.e., the probability that the PSNR of the decoded image is below a given threshold, is upper-bounded by a user-defined value. A new code-allocation algorithm is proposed, which employs Gilbert-Elliot modeling of the network statistics. Experimental results are provided in the case of transmission of images encoded by SPIHT and JPEG 2000 over a wireline, as well as a wireless UMTS-based Internet connection.