The biggest obstacle to the multimedia revolution is digital obesity. This is the blot that occurs when pictures, sound and video are converted from their natural analog form into computer language for manipulation or transmission. In the present explosion of high quality data, the need to compress it with less distortion of data is the need of the hour. Compression lowers the cost of storage and transmission by packing data into a smaller space. One of the hottest areas of advanced form of compression is wavelet compression. Wavelet Video Processing Technology offers some alluring features, including high compression ratios and eye pleasing enlargements. Wavelet-based coding provides substantial improvement in picture quality at low bit rates because of overlapping bases function and better energy compaction property of wavelet transforms. Because of the inherent multi resolution nature wavelet based codes facilitate progressive transmission of images thereby allowing variable bit rates. The JPEG-2000 standard incorporates wavelet technology. Interesting issues like obtaining accurate models of images, optimal representations of such models and rapidly computing such optimal representation are the grand challenges facing the data compression community. Interaction of harmonic analysis with data compression, joint source channel coding, image coding based on models of human perception, scalability robustness, error resilience, and complexity are a few of the many outstanding challenges in image coding to be fully resolved and may affect image data compression performance in the years to come.