Lossy Lempel-Ziv algorithm for image compression

In this paper a modification of Lempel-Ziv algorithm for lossy image compression is presented. With minor image distortion, much higher compression ratio can be achieved. Based on the local image activity, measured through local variance, criterion for error-masking is designed. In image areas with higher variance, a higher image distortion is allowed, and vice versa. By applying this method, minimal observer´s irritation with high compression ratio can be achieved.