A new interframe coding technique called interframe hierarchical address-vector quantization (IHA-VQ) is presented. It exploits the local characteristics of a moving image's motion-compensated (via block matching) difference signals by using quadtree segmentation to divide each image into large, uniform regions and smaller, highly detailed regions. The detailed regions are encoded by vector quantization (VQ), and the larger, low-detail regions are replenished from the previous frame, IHA-VQ also exploits the correlation between the small blocks by encoding the addresses of neighboring vectors by using several codebooks of address code-vectors.>