An efficient quantization and encoding of BTC (Block Truncation Coding) parameters {($Y_{alpha},;Y_{eta}),;P_{{eta}/{eta}}$} are investigated, In our algorithm 4${ imes}$4 blocks are classified into flat or edge block. While edge block is represented by two approximation level $Y_{alpha},;Y_{eta}$ with label plane $P_{{eta}/{eta}}$, flat block is represented by single approximation level Y. The approximation levels Y, $Y_{alpha}$ and $Y_{eta}$ are encoded by predictive quatization specially designed, and the label plane $P_{{eta}/{eta}}$ is tried to be encoded using stored 32 reference plantes. The performance of the proposed scheme has appeared comparable to much more complex transform coding in terms of SNR, although it requires more study on the representation of small slope in background.