ABSTRACT Image compression is minimizing the size in bytes of a graphics file without degrading the quality of the image to an unacceptable level ,the reduction in file size allows more images to be stored in a given amount of disk or memory space, it also reduces the time required for images to be sent over the ground This paper presents a new coding scheme for satellite images. In this study we apply the fast Fourier transform and the scalar quantization for standard LENA image and satellite image, The results obtained after the (SQ) phase are encoded using entropy encoding, after decompression, the results show that it is possible to achieve higher compression ratios, more than 78%, the results are discussed in the paper. KEYWORDS Encoding Entropy, Fast Fourier transform, Compression, SQ.