1. A method of coding a video signal frame f(t), comprising the steps of: deriving a wavelet representation of a signal defined by a plurality of wavelets each corresponding to a subframe having a resolution; estimating motion vectors for each of said plurality of wavelets to produce a set of displaced residual wavelets; optimally assigning a given number of bits to each of said displaced residual wavelets to produce a respective bit map for each of aid displaced residual wavelets; adaptively quantizing each of said displaced residual wavelets using its respective bit map; and coding each quantized displaced residual wavelet into a bit stream wherein the step of estimating motion vectors includes the steps of: dividing each subframe into a see of blocks defining a grid, wherein the size of each block is based on the associated resolution of the respective subframe; calculating a motion vector, relative to a previous frame, for each block of a lowest resolution subframe; calculating motion vectors of each block of other subframes, comprising the steps of scaling a motion vector corresponding to a respective block of said lowest resolution subframe, and calculating a motion vector, relative to the previous frame, for a block under motion compensation using the scaled motion vector.