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In this paper, we implement an adaptive modulation and channel coding scheme for image transmission over Rayleigh fading channels. We propose a new approach where the modulation level and coding rate are selected based on the importance of the compressed bit stream and channel conditions. The proposed scheme attempts to meet a predefined target bit error rate (BER) and yet avoid over protection, hence it improves the bandwidth efficiency which consequently increases the effective transmission rate. Simulation results show that the proposed scheme significantly improved the spectral efficiency while keeping high peak signal-to-noise ratio (PSNR) performance and excellent perceptual quality.