A novel coding scheme using orthonormal wavelet transform is proposed. Various forms of transform coding and subband coding are first reviewed. Then a wavelet coding method is proposed adopting a new approach similar to the one used for transform coding. The approach differs to conventional ones which considers wavelet coding as a class of subband coding. Simulation work is carried out to evaluate the proposed coding method. Significant improvement is obtained in subjective quality, and some improvement is also obtained in signal to noise ratio. Wavelet coding is still in its early stage of development, but can be considered to be a promising technique for image coding.