With the advancement in photography, there is a rapid growth of images in Social Media. This increase poses a challenge for the effective storage and fast transmission of images. In order to meet this demand, for a set of images, the compression can be improved by removing redundancies present among the images in the set and the individual image. In this paper, Image Averaging and Transform Coding (IATC) is proposed for the compression of image sets. In IATC, Residual images are generated by taking the difference between the mean of all the images and original images. The wavelet coefficients of the DWT transformed mean and the residual images are Huffman encoded. The performance of proposed method is evaluated based on Correlation coefficient, Bit-Saving (%), Root Mean Square error and Compression Time for both similar and dissimilar image sets. The results show improvement in bit saving of the image sets. © 2018