An image data compression method for a digital VCR must satisfy special requirements such as high speed playback. various edting capabilities and error concealment to provide immunity to tape dropouts. Taking these requirements requirements into consideration, this paper proposes a new interframe subband coding algorithm for a digital VCR. In the proposed method, continuous input images are fist partitioned into four frequency bands. The lowest frequency subband is coded with 3-D block adaptive quantization that removes the level redundancy within each level. The other higher frequency subbands are coded by an intraframe coding method using the property of the human visual system. To keep reasonable image quality in high speed palyback, a segment forming method in the frequency domaing is also proposed Computer simulation results demonstrate that the proposed algorithm has the potential of achieving virtually lossless compression in normal play and produces an image with less mosaic errors in high speed play.