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In this paper, a near lossless image compression algorithm is presented for high quality satellite image compression. The proposed algorithm makes use of the recommendation for image data compression from the Consultative Committee for Space Data Systems (CCSDS) and specific residue image bit-plane compensation. Comparing with the recommendation for satellite image compression from CCSDS, the proposed algorithm can reconstruct near lossless images with less bit rate than the recommendation of CCSDS does. Benefited from run-length coding and specific residue image bit-plane compensation, the proposed algorithm can obtain higher quality satellite image at similar bit rate or lower bit rate at the similar image quality. These results are valuable for reducing transmission time of high quality satellite image data. This work can be further improved by combining other binary compression techniques and the extension of this work may offer a VLSI or a DSP implementation of the proposed algorithm. Satellite image transmission and storage system can benefit by the proposed algorithm.