This paper investigates the design and application of the optimal filter banks for a prediction-compensated multiple description coding (PC-MDC) scheme, where the coefficients in each subband are split into two descriptions. Each description also includes the prediction residuals of the data in the other description. The optimal designs of orthogonal and biorthogonal filter banks with multiple-level decompositions are formulated in a unified framework. The optimal results in all cases are found to be very close to the optimal filter banks in traditional single description coding. This allows us to apply the proposed method to existing systems with single-description-optimized filter banks and still enjoy near-optimal performance. Image coding results in the JPEG 2000 framework show that the proposed method achieves similar or better performance than other methods. It also has lower complexity and is more compatible to the JPEG 2000 standard.