Advanced digital imaging technology in medical domain demands efficient and effective DICOM image compression for progressive image transmission and picture archival. Here a compression system, which incorporates sensitivities of HVS coded with SPIHT quantization, is discussed. The weighting factors derived from luminance CSF are used to transform the wavelet subband coefficients to reflect characteristics of HVS in best possible manner. Mannos et al. and Daly HVS models have been used and results are compared. To evaluate the performance, Eskicioglu chart metric is considered. Experiment is done on both Monochrome and Color Dicom images of MRI, CT, OT, and CR, natural and benchmark images. Reconstructed image through our technique showed improvement in visual quality and Eskicioglu chart metric at same compression ratios. Also the Daly HVS model based compression shows better performance perceptually and quantitatively when compared to Mannos et el. model. Further "bior4.4" wavelet filter provides better results than "db9" filter for this compression system. Results give strong evidence that under common boundary conditions; our technique achieves competitive visual quality, compression ratio and coding/decoding time, when compared with jpeg2000 (kakadu). © 2007.