Due to the bandwidth and storage limitations, image must be compressed before transmission. The set partitioning in hierarchical trees (SPIHT) algorithm is an efficient method for lossy and lossless coding of image. This paper presents some modifications on the set partitioning in hierarchical trees (SPIHT) algorithm. It is based on the idea of insignificant correlation of wavelet coefficient among the medium and high frequency subbands respectively.In this scheme, insignificantwavelet coefficients that correspond to the same spatial location in the medium subbands can be used to reduce the redundancy by a combined function that modifed SPIHT proposes. In the high frequency subbands, the modified SPIHT proposes dictator to reduce the interband redundancy. Experimental results show that the proposed technique improves the quality of the reconstructed image in both PSNR and perceptual results when compare to JPEG2000 at the same bit rate.