In this paper, we propose an image compression algorithm that uses a hybrid transform and an improved modified set partitioning in hierarchical trees (SPIHT) coding algorithm. The proposed transform uses the subband discrete cosine transform to decompose the image into multiresolution subbands where the discrete wavelet transform is then used to code the low frequencies. Then, we use the SPIHT coding method to code the transformed coefficients. For the SPIHT algorithm, we have proposed a method to reduce the distortion introduced by the SPIHT technique between the original and reconstructed images. The obtained results show the efficiency of the proposed hybrid method in terms of peak signal-to-noise ratio and visual quality.