The present invention provides for a method and system for reducing the storage required for transmitting digital images. The reduction is accomplished by coalescing identical pixels that are adjacent to each other. Accordingly, a determination is made as to whether pixels along a first axis are identical with pixels along a second axis and, if they are identical, they are coalesced together. The process is repeated along a second axis such that an image resulting from the reduction is significantly smaller, especially if the image was originally upsampled. The present invention reverses the upsampling process to create a reduced image. Additionally, the present invention allows for differentiation between upsampled contone data and linework data that may be overlaid over upsampled contone data. Image data that is linework data is treated as wild card pixels in the image and may be coalesced with any adjacent pixel when coalescing adjacent pixels.