Abstract: This paper first introduces the idea about orientation wavelet subtree quantization and constructs a hybrid image coding using orientation wavelet subtree fractal quantization and zerotree wavelet quantization. With this coding method the horizontal, vertical and diagonal scaling factors of quadtrees are treated independently according to the statistic analysis of test image orientation property and a result of a marked improvement in accuracy with respect to quantization for image compression is obtained. The coding results of this hybrid coding scheme outperform conventional fractal coders and Davis SQS method.