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A new generalized multilevel block truncation coding (BTC) algorithm based on a mean absolute error criterion is proposed. The proposed multilevel BTC algorithm requires only additions/subtractions to segment a block into desired regions. The simulation results indicate that the mean absolute error and peak signal-to-noise ratio (PSNR) of the algorithm is very close to those of the optimum BTC. The performance of the algorithm is superior to other multilevel BTC algorithms that have been proposed, both in image quality and in computational complexity.