Wavelet coding is often used to divide an image into multi- resolution wavelet coefficients which are quantized and coded. By 'vectorizing' scalar wavelet coding and combining this with vector quantization (VQ), vector wavelet coding (VWC) can be implemented. Using a finite number of states, finite-state vector quantization (FSVQ) takes advantage of the similarity between frames by incorporating memory into the video coding system. Lattice VQ eliminates the potential mismatch that could occur using pre-trained VQ codebooks. It also eliminates the need for codebook storage in the VQ process, thereby creating a more robust coding system. Therefore, by using the VWC coding method in conjunction with the FSVQ system and lattice VQ, the formulation of a high quality very low bit rate coding systems is proposed. A coding system using a simple FSVQ system where the current state is determined by the previous channel symbol only is developed. To achieve a higher degree of compression, a tree-like FSVQ system is implemented. The groupings are done in this tree-like structure from the lower subbands to the higher subbands in order to exploit the nature of subband analysis in terms of the parent-child relationship. Class A and Class B video sequences from the MPEG-IV testing evaluations are used in the evaluation of this coding method.