Thisletterproposesanefficientwavelet-basedFineGranularityScalable(FGS)codingscheme,wherethebaselayerisencodedwithanewlydesignedwavelet-basedcoder,andtheenhancementlayerisencodedwithProgressiveFineGranularityScalable(PFGS)coding.Thisalgorithminvolvesmulti-framemotioncompensation,rate-distortionoptimizingstrategywithLagrangiancostfunctionandcontext-basedadaptivearithmeticcoding.Inordertoimproveefficiencyoftheenhancementlayercoding,animprovedmotionestimationschemethatusesbothinformationfromthebaselayerandtheenhancementlayerisalsoproposedinthisletter.Thewavelet-basedcodersignificantlyimprovesthecodingefficiencyofthebaselayercomparedwithMPEG-4ASP(AdvancedSimpleProfile)andH.26LTML9.ThePFGScodingisasignificantimprovementoverMPEG-4FGScodingattheenhancementlayer.Experimentsshowthatsinglelayercodingefficiencygainoftheproposedschemeisabout2.0-3.0dBand0.3-1.0dBhigherthanthatofMPEG-4ASPandH.26LTML9,respectively.Theoverallcodingefficiencygainoftheproposedschemeisabout4.0-5.0dBhigherthanthatofMPEG-4FGS.