We describe a compression method for floating-point astronomical images that gives compression ratios of 6 -- 10 while still preserving the scientifically important information in the image. The pixel values are first preprocessed by quantizing them into scaled integer intensity levels, which removes some of the uncompressible noise in the image. The integers are then losslessly compressed using the fast and efficient Rice algorithm and stored in a portable FITS format file. Quantizing an image more coarsely gives greater image compression, but it also increases the noise and degrades the precision of the photometric and astrometric measurements in the quantized image. Dithering the pixel values during the quantization process can greatly improve the precision of measurements in the images. This is especially important if the analysis algorithm relies on the mode or the median which would be similarly quantized if the pixel values are not dithered. We perform a series of experiments on both synthetic and real astronomical CCD images to quantitatively demonstrate that the magnitudes and positions of stars in the quantized images can be measured with the predicted amount of precision. In order to encourage wider use of these image compression methods, we have made available a pair of general-purpose image compression programs, called fpack and funpack, which can be used to compress any FITS format image.
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