This paper presents a new coding technique based on a mixed contourlet and wavelet transform. The redundancy of the transform is controlled by using the contourlet at fine scales and by switching to a separable wavelet transform at coarse scales. The transform is then optimized through an iterative projection process in the transform domain in order to minimize the quantization error in the image domain. A gain of respectively up to 0.5dB and to 1 dB over respectively contourlet and wavelet based coding has been observed for images with directional features.