An algorithm is described for simultaneously compressing
and denoising images.  The algorithm is called Tree-Adapted 
Wavelet Shrinkage and Compression (TAWS-Comp).
TAWS-Comp is a synthesis of an image compression algorithm,
Adaptively Scanned Wavelet Difference Reduction (ASWDR), and a
denoising algorithm, Tree-Adapted Wavelet Shrinkage (TAWS).  As
a compression procedure, TAWS-Comp inherits all of the advantages
of ASWDR: its ability to achieve a precise bit-rate assigned before
compressing, its scalability of decompression, and its capability
for enhancing regions-of-interest. Such a full range of features
has not been available with previous compressor plus denoiser 
algorithms. As a denoising procedure, TAWS-Comp is nearly as 
effective as TAWS alone.  TAWS has been shown to have good 
performance, comparable to state of the art denoisers.  In 
many cases, TAWS-Comp matches the performance of TAWS while
simultaneously performing compression.  TAWS-Comp is compared 
with other combined compressor/denoisers, in terms of error 
reduction and compressed bit-rates.

   Simultaneous compression and denoising is needed when
images are acquired from a noisy source and storage or 
transmission capacity is severely limited (as in some video
coding applications).  An application is described where the
features of TAWS-Comp as both compressor and denoiser are exploited.