In this paper, an image coding technique using fractal interpolation is proposed. Similar to the conventional methods, an image is partitioned into blocks and each block is coded independently. However, an interpolation point is ahsared by its neighboring blocks. This means that each block can use all its interpolation points with minimal increase of new data. For a simple implementation, triangular blocks are used instead of square blocks and new coefficients are difined. Data obtained in the encoding process hav estatistical characteristics suitable sfor entropy coding, an dthus arithmetic coding is perfomred for improving the compression efficiency. The results of the proposed coder in comparison with those of a conventional coder show that the interpolation method reduces block effect caused by a memoryless block coder, especially at low bit rates. This improvement is due to sharing of information between adjacent blocks. Moreover, th enumber of iteration required in ecoding process is reduced since more information is used to decode each block.