1. A method of generating perceptually lossless compression of image data or perceptually enhanced compression of image data including the steps of; receiving an image, color transforming the received image to a desired color space, forming converted color-space (CCS) images; transforming the CCS images into transformed CCS images; applying quantization to the CCS transform images to form quantized CCS images; processing the CCS quantized images using an image processor to produce optimized CCS images that are perceptually lossless or perceptually enhanced in quality; and encoding the optimized CCS images for subsequent storage and/or transmission.