Discrete cosine transform (DCT) is widely used in many practical image/video compression systems because of its compression performance and computational efficiency. This work adopts DCT, and modified the SPIHT algorithm that designed initially for encoding the discrete wavelet transform (DWT) coefficients in order to suit to encode DCT coefficients. The algorithm represents the DCT coefficients to concentrate signal energy and proposes combination and dictator to eliminate the correlation in the same level subband for encoding the DCT-based images. The coding complexity of the proposed algorithm for DCT coefficients is just close to JPEG but the performance is higher than JPEG2000. Furthermore, the proposed algorithm append to deblocking function in low bit rate in order to improve the perceptual quality. Experimental results indicate that the proposed technique improves the quality of the reconstructed image in terms of both PSNR and the perceptual results over JPEG2000 at the same bit rate.