1. A method for real-time compression of video data comprising the steps of: (a) applying 2D wavelet transform to each video frame to generate LL, LH, HL, and HH bands; (b) applying 2D wavelet transform to each video frame in the LL band to create LL, LH, HL, and HH subbands; (c) within each LL band or subband, (i) comparing a current video frame to a next video frame to compute a difference between the frames; (ii) assigning the current video frame to a current group if the difference is less than or equal to a threshold; (iii) assigning the current video frame to a new group if the difference is greater than the threshold; (d) quantizing the wavelet coefficients from the LH, HL, and HH bands resulting from step (a); (e) quantizing the wavelet coefficients from the LL subband resulting from step (b); (f) applying wavelet transform in the temporal domain to the quantized wavelet coefficients resulting from step (e); (g) quantizing the wavelet coefficients resulting from step (f); (h) encoding the quantized wavelet coefficients resulting from step (d); (i) encoding the quantized wavelet coefficients resulting from step (g); (j) outputting the encoded quantized wavelet coefficients from steps (h) and (i).