In this paper a novel multiresolution human visual system and statistically based image coding scheme is presented. It decorrelates the input image into a number of subbands using a lifting based wavelet transform. The codec employs a novel statistical encoding algorithm to code the coefficients in the detail subbands. Perceptual weights are applied to regulate the threshold value of each detail subband that is required in the statistical encoding process. The baseband coefficients are losslessly coded. An extension of the codec to the progressive transmission of images is also developed. To evaluate the performance of the coding scheme, it was applied to a number of test images and its performance with and without perceptual weights is evaluated. The results indicate significant improvement in both subjective and objective quality of the reconstructed images when perceptual weights are employed. The performance of the proposed technique was also compared to JPEG and JPEG2000. The results show that the proposed coding scheme outperforms both coding standards at low compression ratios, while offering satisfactory performance at higher compression ratios