The quick expansion of image compression has immensely increased to decline memory capacity without reducing the clarity of an image. This paper relates memory compensation errors in JPEG2000 for reducing memory size. Moreover, we use various compensation techniques such as Discrete Wavelet Transform to mollify memory utilization and recommend Entropy coding algorithm, MQ-Coding for tailoring memory errors. The Entropy coder can be recycled to diminish and store enormous chunk of data in a memory. These systems do not prefer any supplementary memory can lessen the memory condition having the fewer computation complexity with larger size and more power consumption. The proposed architecture is to adopt Set Partitioning in Hierarchical Trees in augmentation with Discrete Wavelet Transform which is used to increase the image quality along with the compression ratio. By this technique, memory miscalculation can be neglected. The image quality can be lifted. It lessens the coefficient value and boosts the quality of the image.