A system and method for signal processing using wavelets are disclosed. The method includes the steps of generating a wavelet decomposition tree modeling the signal. The tree includes a plurality of levels of wavelet coefficients representative of the signal. The method further includes determining the actual number of wavelet coefficients available at each of the plurality of levels; measuring mean energy for each of the plurality of levels; and determining a desired number of wavelet coefficients for each of the plurality of levels based on the mean energy determined in the step of measuring. The mean energy in the step of measuring for each of the plurality of levels is indicative of the desired number of wavelet coefficients selected from each of the plurality of level. The method further includes the step of retaining the desired number of wavelet coefficients and forming a compressed representation of the signal.
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