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A progressive image transmission scheme is presented. This scheme has an iterative structure in which vector quantisation is iteratively applied to the residual error images of previous quantisation and an entropy coder is responsible for coding the final error image. At each stage, a fraction of the image information is transmitted and utilised in reconstructing successive approximations of the image. Iterative coding of the residual error images makes it possible to transmit the image progressively, at the same time further compression is achieved by applying vector quantisation at each stage. Lossless reproduction is guaranteed by an entropy coder at the final stage. The simulation results demonstrate that the proposed scheme achieves, simultaneously, lossless, progressive transmission of the image at an appreciable amount of data compression. Finally, iterative vector quantisation is shown to outperform single-stage vector quantisation.