With the rapid development in communications technology, various methods of medical image transmission are investigated. A comprehensive system integrating various applications within a common infrastructure is usually necessary for this purpose. This infrastructure includes the physical facilities and equipments which are used to capture, transmit, store, process, and display medical data and images. To effectively reduce the cost of realizing the infrastructure, data compression is usually desired so that the bandwidth and storage requirements for delivering and storing medical data are lowered. In this research work, initially the images are enhanced using local adaptive filter and the Pixels of Interest (POI) is selected to reduce the size of the medical image to be transferred. The second step is where a modified Discrete Wavelet Transform (MDWT) is applied to compress the image data with minimum storage space, and then the image is transmitted over the Internet. At the receiving side the POI image is reconstructed. The objectives of this research are to design and implement Modified DWT compression technique using a uniform quantizer and reduced Sub band Coding to split up the frequency band of a image and then to code each sub band using a coder. Dimension reduction technique is used to reduce the storage space. The developed algorithm involves dimension reduction technique by using intermediate co-efficient storage to reduce the storage space in the DWT architecture. Hence, at the receiver the side, retrieval of intermediate co-efficient is obtained by decoding each sub band using decoder for the frequency band of the images. By using the IDWT, the original image is retrieved without any loss of information in the image. To compare the measure of compression MSE, PSNR and SNR values, ROI of the CT images are compressed by using standard JPEG and DWT methods. Image compression using JPEG, DWT and Modified DWT has been developed to find optimum method for transmitting medical images through the Internet with less storage space and low bandwidth requirements. The present method offered better results and is found to be the optimum method with high PSNR, low MSE and less storage space. As a future work, the effectiveness of Modified DWT will be compared with other emerging Imaging techniques by taking image as a whole. In medical image transmission, instead of still medical images which used imaging techniques, moving images may also be transmitted using modified DWT.