Most existing lossless image compression schemes operate on grey-scale images. However, in the case of colour images, higher compression ratios can be achieved by exploiting inter-colour redundancies. A new lossless colour transform is presented, based on the KLT. This transform removes redundancies in the colour representation of each pixel and can be combined with many existing compression schemes. In this paper it is combined with a prediction scheme that exploits spatial redundancies. The results proposed in this paper show that the colour transform typically saves about a half to two bits per pixel, compared to a purely predictive scheme. 1999 Pattern Recognition Society. Published by Elsevier Science Ltd. All rights reserved.