A method of processing video image data for use in the storage or transmission of moving digital video images, includes decomposition of each frame image into an equivalent set of sub-images containing information on different length scales, derivation of encoded prediction rules from the decomposed data to approximate each sub-image using data from the immediately preceding compressed sub-image and data from the current sub-image to produce compressed data of an image for subsequent storage or transmission to a receiver and reconstruction, after retrieval or receipt, by comparison of the compressed data received for the current frame image with the reconstruction of the preceding frame image.