Images have large data capacity. For storage and transmission of images, high efficiency image compression methods are under wide attention. In this paper we implemented a wavelet transform, DPCM and neural network model for image compression which combines the advantage of wavelet transform and neural network. Images are decomposed using Haar wavelet filters into a set of sub bands with different resolution corresponding to different frequency bands. Scalar quantization and Huffman coding schemes are used for different sub bands based on their statistical properties. The coefficients in low frequency band are compressed by Differential Pulse Code Modulation (DPCM) and the coefficients in higher frequency bands are compressed using neural network. Using this scheme we can achieve satisfactory reconstructed images with increased bit rate, large compression ratios and PSNR.