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JPEG 2000 offers critical advantages over other still image compression schemes at the price of increased computational complexity. Hardware-accelerated performance is a key to successful development of real time JPEG 2000 solutions for applications such as digital cinema and digital home theatre. The crucial role in the whole processing plays embedded block coding with optimized truncation because it requires bit-level operations. In this paper, a dedicated architecture of the block-coding engine is presented. Square-based bit-plane scanning and the internal first-in first-out are combined to speed up the context generation. A dynamic significance state restoring technique reduces the size of the state memories to 1 kbits. The pipeline architecture enhanced by an inverse multiple branch selection method is exploited to code two context-symbol pairs per clock cycle in the arithmetic coder module. The block-coding architecture was implemented in VHDL and synthesized for field-programmable gate array devices. Simulation results show that the single engine can process, on average, about 22 million samples at 66-MHz working frequency.