Method of digital video reference frame compression

The digital video referencing frame image is compressed block by block by applying lossless compression algorithm to pixel components with full length, or 1 bit, 2 bits, 3 bits or 4 bits LSB bits truncation. If a sub-block has high complexity which results in more than 3 bits error for most pixel components, a transfer algorithm with quantization and VLC coding is applied to compress this sub-block. Should the complexity is higher than a threshold or at least one sub-block having error of more than 3 bits for most pixel components, truncating 1 LSB bit of sub-block with simple pattern to save more bits to be allocate to code the sub-block with highest complex pattern.