1. A method of reducing noise in a video image, comprises the steps of: (a) decomposing the video image by a transform into multiple resolution levels representing different classes of image data; (b) selecting threshold values based on the relationships between the noise standard deviations of different decomposition levels in the transform domain and the noise standard deviation of the original video image; (c) applying a thresholding function to the transform coefficients of the classes of data in different resolution levels with different selected threshold values, to essentially eliminate image information corresponding to noise in the classes of data; and (d) reassembling the classes of data at said multiple resolution levels into a reconstructed image with reduced noise.