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This paper presents a wavelet-based image coder that is optimized for transmission over the binary symmetric channel (BSC). The proposed coder uses a robust channel-optimized trellis-coded quantization (COTCQ) stage that is designed to optimize the image coding based on the channel characteristics. A phase scrambling stage is also used to further increase the coding performance and robustness to nonstationary signals and channels. The resilience to channel errors is obtained by optimizing the coder performance only at the level of the source encoder with no explicit channel coding for error protection. For the considered TCQ trellis structure, a general expression is derived for the transition probability matrix. In terms of the TCQ encoding rat and the channel bit error rate, and is used to design the COTCQ stage of the image coder. The robust nature of the coder also increases the security level of the encoded bit stream and provides a much more visually pleasing rendition of the decoded image. Examples are presented to illustrate the performance of the proposed robust image coder.