The amount of image data generated in multimedia applications is ever increasing. The image compression plays vital role in multimedia applications. The ultimate aim of image compression is to reduce storage space without degrading image quality. Compression is required whenever the data handled is huge they may be required to sent or transmitted and also stored. The New Edge Directed Interpolation (NEDI)-based lifting Discrete Wavelet Transfrom (DWT) scheme with modified Set Partitioning In Hierarchical Trees (MSPIHT) algorithm is proposed in this paper. The NEDI algorithm gives good visual quality image particularly at edges. The main objective of this paper is to be preserving the edges while performing image compression which is a challenging task. The NEDI with lifting DWT has achieved 99.18% energy level in the low frequency ranges which has 1.07% higher than 5/3 Wavelet decomposition and 0.94% higher than traditional DWT. To implement this NEDI with Lifting DWT along with MSPIHT algorithm which gives higher Peak Signal to Noise Ratio (PSNR) value and minimum Mean Square Error (MSE) and hence better image quality. The experimental results proved that the proposed method gives better PSNR value (39.40 dB for rate 0.9 bpp without arithmetic coding) and minimum MSE value is 7.4.
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