A method of coding High Definition (HD) color pictures is described. The method divides the HD picture into individual bit planes of the three colors. The method then interleaves the bit planes such that bit planes of the three colors having the same significance are coded together. The method codes a block of the picture based on the bit distribution in corresponding groups of the corresponding bit planes of the three colors. The method performs a first level grouping of bits in a bit plane of an image and a second level grouping of the first level grouping bits of different color components within a group.