In recent years, image coding based on wavelet transform has made rapid progress. In this paper, quincunx lifting scheme in wavelet transform is introduced and all phase interpolation filter banks which can be used in the lifting scheme for prediction and update are designed. Based on the basic idea of set partitioning in hierarchical trees (SPIHT) algorithm, the binary tree image coding algorithm is proposed. Just like SPIHT, the encoding algorithms can be stopped at any compressed file size or let run until the compressed file is a representation of a nearly lossless image. The experimental results on test images show that compared with SPIHT algorithm, the PSNRs of the proposed algorithm are superior by about 0.5 dB at the same bit rates and the subjective quality of reconstructed images is also better.