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In recent years, wavelets have attracted great attention in both still image compression and video coding, and several novel wavelet-based image compression algorithms have been developed so far, one of which is Shapiro's embedded zerotree wavelet (EZW) image compression algorithm. However, there are still some deficiencies in this algorithm. In this paper, after the analysis of the deficiency in EZW, a new algorithm based on quantized coefficient partitioning using morphological operation is proposed. Instead of encoding the coefficients in each subband line-by-line, regions in which most of the quantized coefficients are significant are extracted by morphological dilation and encoded first. This is followed by using zerotrees to encode the remaining space which has mostly zeros. Experimental results show that the proposed algorithm is not only superior to the EZW, but also compares favorably with the most efficient wavelet-based image compression algorithms reported so far. [ABSTRACT FROM AUTHOR]