Image processing is done by separating image data into foreground image data, background image data, and mask image data. The foreground image data is divided into a plurality of square blocks composed of a plurality of pixels. The difference between maximum pixel values and minimum pixel values in each square block is compared to a threshold value. If the difference is below the threshold, the pixel value data in the square block is averaged. If the difference is above the threshold, the plurality of square blocks may be subdivided into smaller square blocks and the difference calculated again. If the difference is below the threshold, the pixel value data in the smaller square block is averaged. If the difference is above the threshold, the smaller square block is not averaged. Each of the foreground image data, background image data and mask image data are then individually compressed and merged.