\input zb-basic \input zb-ioport \iteman{io-port 05054773} \itemau{Shen, Lixin; Shen, Zuowei} \itemti{Compression with time-frequency localization filters.} \itemso{Chen, Guanrong (ed.) et al., Wavelets and splines: Athens 2005. Papers based on lectures presented at the international conference on interactions between wavelets and splines, Athens, GA, USA, May 16--19, 2005. In honor of Professor Charles K. Chui on the occasion of his 65th birthday. Brentwood: Nashboro Press (ISBN 0-9728482-6-6/hbk). Modern Methods in Mathematics, 428-443 (2006).} \itemab Summary: The wavelet transformations combined with the zerotree algorithm have proven to be an efficient compression scheme in many applications. This scheme keeps filters fixed at the all resolution levels. We propose here a bi-filter method that uses different filters at different resolution levels. At high levels, good frequency localization filters are used. They are replaced by good time localization ones at lower levels. We choose to use filters derived from interpolatory refinable functions. The detailed design and analysis are included. The numerical empirical results show that this bi-filter compression scheme keeps more texture details of the original images. \itemrv{~} \itemcc{} \itemut{signal compression; image compression; numerical examples; wavelet transformations; zerotree algorithm; bi-filter method} \itemli{} \end