A method of acoustic processing for acoustic image classification of an underwater target from a set of known target hypotheses is provided. An acoustic waveform is transmitted into a test volume of water containing the target to be classified. The test volume is divided into test cells such that each test cell contains a portion of the target or scatterer that will scatter the transmitted waveform. Scattering of the transmitted waveform at each test cell is described by a scattering coefficient that is unique for each of the targets in the set of known hypotheses. Accordingly, the scattering coefficient serves as an identifier of the target to be classified. The relationship of the set of scattering coefficients for each of the known target hypotheses is provided by a known covariance matrix. An acoustic receive array receives a portion of the scattered waveform from each of the test cells in the test volume. This received portion is a function of the scattering coefficients of the target to be classified and the transmitted waveform appropriately time delayed by the time between transmission and receipt. The scattering coefficients at each test cell are then estimated for each of the possible hypotheses. Estimation is based upon the known covariance matrices and the receive portion of the scattering. Then, an estimation is made of the received portion of the scattering for each of the possible hypotheses. Estimation of this receive portion is based upon the estimated scattering coefficients and the time-delayed, transmitted waveform. Finally, the estimated received portion of the scattering is correlated with the actual received portion of the scattering. A high correlation is indicative of the target to be classified.