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In this paper, we propose a novel second generation wavelets based lifting filter for image noise cancellation. The algorithm finds the most significant impulse noise points based on the values of their neighboring points, which are then used for noise cancellation. The algorithm works well for grayscale images and it has been compared with the adaptive filter with weight training mechanism method. The efficacy of the proposed lifting filter method has been shown and the results are gauged using PSNR measures.