This paper describes a new image coding system which combines the detection and coding of visually significant edges in natural images. The edges are defined as amplitude discontinuities between different regions of an image. The edge detection system makes use of 3 x 3 masks, which are well suited for digital implementation. Edge angles are quantized to eight equally spaced directions, suitable for chain coding of contours. Use of an edge direction map improves the simple thresholding of gradient modulus images. The concept of local connectivity of the edge direction map is useful in improving the performance of this method as well as other edge operators such as Kirsch and Sobel. The concepts of an "edge activity index" and a "locally adaptive threshold" are introduced and shown to improve the performance even further.