We present an algorithm for image compression based on an image inpainting method. First the image regions that can be accurately recovered are located. Then

to reduce the data

information of such regions is removed. The remaining data besides essential details for recovering the removed regions are encoded to produce output data. At the decoder

an inpainting method is applied to retrieve removed regions using information extracted at the encoder. The image inpainting technique utilizes partial differential equations (PDEs) for recovering information. It is designed to achieve high performance in terms of image compression criteria. This algorithm was examined for various images. A high compression ratio of 1:40 was achieved at an acceptable quality. Experimental results showed attainable visible quality improvement at a high compression ratio compared with JPEG.