1. A video coding method using wavelets with an adaptive scanning method comprising the steps of: subjecting an input video signal to wavelet decomposition to obtain base, horizontal, vertical and diagonal bands of wavelet coefficients; subjecting the resulting base band to further wavelet decomposition to obtain lower layers of base, horizontal, vertical and diagonal bands of wavelet coefficients; grouping co-sited coefficients from the layers of horizontal, vertical and diagonal bands into a plurality of horizontal, vertical and diagonal macro-bands, respectively; adaptively scanning the coefficients in said macro-bands into a plurality of one dimensional arrays by: 1) for each horizontal macro-band, horizontally scanning the first column at the beginning of each horizontal band until a non-zero coefficient is found, and vertically scanning the remainder of the coefficients in each horizontal band by starting from the next vertical coefficient from said non-zero coefficient, and wrapping around to the coefficients that have not been scanned before proceeding to the next band, 2) for each vertical macro-band, vertically scanning the first row at the beginning of each vertical band until a non-zero coefficient is found, and horizontally scanning the remainder of the coefficients in each vertical band by starting from the next horizontal coefficient from said non-zero coefficient, and wrapping around to the coefficients that have not been scanned before proceeding to the next band, and 3) one of zig-zag scanning and raster scanning each diagonal macro-band; and entropy coding each of said one dimensional arrays.