1. A method for creating, from a digitized color image with N distinct colors using a data processing system, a tree structured partitioning of all pixels in the digitized color image into M disjoint clusters, wherein M is less than or equal to N, each color in the N distinct colors is digitally represented in a color palette by a plurality of P-bit bytes, and the P-bits in each P-bit byte are ordered from most significant to least significant, the method comprising: (a) providing a root node comprising each color in the N distinct colors; (b) providing a plurality of sibling nodes at a first level of nodes, wherein each sibling node in the plurality of sibling nodes is linked to the root node, and each color in the N distinct colors is allocated by the data processing system to a sibling node in the first level of nodes based on a value of a first bit in each P-bit byte in the plurality of P-bit bytes; (c) for each node in a k th level of nodes, that node at the k th level comprising more than one color in the N distinct colors, providing a distinct plurality of sibling nodes at a (k+1) th level of nodes, wherein each sibling node in the distinct plurality of sibling nodes at the (k+1) th level is linked to that node at the k th level, and each color in that node at the k th level is allocated by the data processing system to a sibling node in the distinct plurality of sibling nodes at the (k+1) th level based on a value of a (k+1) th bit in each P-bit byte in the plurality of P-bit bytes for that color, until each color in the N distinct colors is allocated to a distinct leaf node comprising that color alone; and (d) determining a plurality of entropy-constrained cost increments for a plurality of potential mergers of nodes by determining an entropy-constrained cost increment for each such merger, and selecting and merging nodes based on at least one of the plurality of determined entropy-constrained cost increments until there are only M leaf nodes left.