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In this paper, we address issues concerning bilevel image compression using JPEG2000. While JPEG2000 is designed to compress both bilevel and continuous tone image data using a single unified framework, there exist significant limitations with respect to its use in the lossless compression of bilevel imagery. In particular, substantial degradation in image quality at low resolutions severely limits the resolution scalable features of the JPEG2000 code-stream. We examine these effects and present two efficient methods to improve resolution scalability for bilevel imagery in JPEG2000. By analyzing the sequence of rounding operations performed in the JPEG2000 lossless compression pathway, we introduce a simple pixel assignment scheme that improves image quality for commonly occurring types of bilevel imagery. Additionally, we develop a more general strategy based on the JPIP protocol, which enables efficient interactive access of compressed bilevel imagery. It may be noted that both proposed methods are fully compliant with Part 1 of the JPEG2000 standard.