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We propose a new still image coding technique which is a highly developed version of the renowned wavelet difference reduction (WDR). This new coder inherits the important properties from the original WDR, such as embeddedness, target compression ratio, region of interest support and the simplicity. The special treatment is performed in the significant pass by using context-based adaptable scanning order to predict the new significant coefficients. The prediction model is based on the compactness in subband coefficients and also the quadtree relation between the same orientation subbands. In binary mode, the coder is consistently better than SPIHT. A new conditional arithmetic coding (AC) using array of contexts is specifically designed for WDR-based coder. Rate-distortion results of the new coder in AC mode are superior to all other WDR-based coders in the literature and are very comparable to SPIHT-AC and JPEG2000, the best coders, at all bit rates for all images in the test set.