We propose a new image coding method which takes into account both statistical redundancy and perceptual irrelevancy of the DCT coefficients so as to provide a high quality of the reconstructed images with a reduced transmission bit rate First, a block of DCT coefficients are decomposed into 16 subvectors so as for a subvector to convey key information about one of the low-pass or the dirctional filtered images. Then, the most significant subvector is selected as the principal edge of the block and then vector quantized. After that, the residuals of the block are computed and then sequentially quantized through aforementioned procedure until the quantization distortion is smaller than the target distortion. The proposed scheme is good at encoding images with a variety of transmission bit rates, especially at very low bit rate coding. In addition, it is another benifit of the proposed scheme that an image can be quantized with a wide range of the transmission bit rates by simply adapting the stopping criterion of the sequential vector quantizer according to the target distortion of the reconstructed image.