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Perfect reconstruction, quality scalability and region-of-interest coding are basic features needed for the image compression schemes used in telemedicine applications. This paper proposes a new wavelet-based embedded compression technique that efficiently exploits the intraband dependencies and uses a quadtree-based approach to encode the significance maps. The algorithm produces a losslessly compressed embedded data stream, supports quality scalability and permits region-of-interest coding. Moreover, experimental results obtained on various images show that the proposed algorithm provides competitive lossless/lossy compression results. The proposed technique is well-suited for telemedicine applications that require fast interactive handling of large image sets over networks with limited and/or variable bandwidth.