Picture archiving and communication systems, especially those for medical applications, will offer the potential to integrate the various image sources of different nature. A major problem, however, is the incompatibility of the different matrix sizes and data formats. This may be overcome by a novel hierarchical coding process, which could lead to a unified picture format standard. A picture coding scheme is described, which decomposites a given (2n)2 picture matrix into a basic (2m)2 coarse information matrix (representing lower spatial frequencies) and a set of n-m detail matrices, containing information of increasing spatial resolution. Thus, the picture is described by an ordered set of data blocks rather than by a full resolution matrix of pixels. The blocks of data are transferred and stored using data formats, which have to be standardized throughout the system. Picture sources, which produce pictures of different resolution, will provide the coarse-matrix datablock and additionally only those detail matrices that correspond to their required resolution. Correspondingly, only those detail-matrix blocks need to be retrieved from the picture base, that are actually required for softcopy or hardcopy output. Thus, picture sources and retrieval terminals of diverse nature and retrieval processes for diverse purposes are easily made compatible. Furthermore this approach will yield an economic use of storage space and transmission capacity: In contrast to fixed formats, redundand data blocks are always skipped. The user will get a coarse representation even of a high-resolution picture almost instantaneously with gradually added details, and may abort transmission at any desired detail level. The coding scheme applies the S-transform, which is a simple add/substract algorithm basically derived from the Hadamard Transform. Thus, an additional data compression can easily be achieved especially for high-resolution pictures by applying appropriate non-linear and/or adaptive quantizing.