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We propose an embedded, block-based, image wavelet transform coding algorithm of low complexity. It uses a recursive set-partitioning procedure to sort subsets of wavelet coefficients by maximum magnitude with respect to thresholds that are integer powers of two. It exploits two fundamental characteristics of an image transform-the well-defined hierarchical structure, and energy clustering in frequency and in space. The two partition strategies allow for versatile and efficient coding of several image transform structures, including dyadic, blocks inside subbands, wavelet packets, and discrete cosine transform (DCT). We describe the use of this coding algorithm in several implementations, including reversible (lossless) coding and its adaptation for color images, and show extensive comparisons with other state-of-the-art coders, such as set partitioning in hierarchical trees (SPIHT) and JPEG2000. We conclude that this algorithm, in addition to being very flexible, retains all the desirable features of these algorithms and is highly competitive to them in compression efficiency.