A wavelet based algorithm for scalable video compression is described, with the main focus put on memory bandwidth reduction and efficient VLSI implementation. The proposed algorithm adopts a modified 2-D subband decomposition scheme in conjunction with a partial zerotree search for efficient Embedded Zerotree Wavelet coding. The experiment with the performance of the proposed algorithm in comparison with that of conventional DWT, MPEG-2, and JPEG demonstrates that the image quality of the proposed algorithm is consistently superior to that of JPEG, and our scheme can even outperform MPEG-2 in some cases, although it does not exploit the inter-frame redundancy. In spite of the performance inferiority to the conventional DWT, the proposed algorithm attains significant reduction of DWT memory requirements, enhancing a reasonable balance between implementation cost and image quality.