In　this　study,　the　authors　present　a　visual　sensitivity-based　low-bit-rate　image　compression　algorithm.　The　authors　algorithm　combines　both　visual　sensitivity　and　compression　techniques　so　that　a　higher　compression　rate,　with　satisfactory　visual　quality,　can　be　achieved.　In　the　coding　process,　the　input　image　is　divided　into　blocks,　and　each　block　is　classified　as　an　edge　block　(EB),　a　textural　block　(TB)　or　a　flat　block　(FB).　For　EBs,　which　are　most　important　to　the　subjective　quality　of　decoded　images,　the　standard　Joint　Photographic　Experts　Group　(JPEG)　coding　scheme　with　a　tolerant　quantisation　step　is　employed　so　as　to　restrict　the　blocking　artefacts　caused　by　the　quantisation　error　to　an　acceptable　level.　For　FBs,　a　skipping　scheme　is　employed　on　blocks　in　the　compression　process　so　as　to　save　the　bits.　The　coding　of　the　skip　blocks,　identified　by　the　skipping　scheme,　will　make　reference　to　the　reconstructed　regions　of　the　image　in　the　encoding　process.　Owing　to　the　masking　effects　of　the　human　visual　system　on　high-frequency　textures,　standard　JPEG　compression　coding　with　a　greater　quantisation　step　is　employed　on　the　down-scaled　version　of　non-skip　blocks　and　TBs.　Experimental　results　show　the　superior　performance　of　our　method　in　terms　of　both　compression　efficiency　and　visual　quality.