A novel algorithm for enhancing colour images is proposed. Since DWT is used in image compression and image compression reduces storage space, an algorithm is developed to work directly in DWT space. DWT separates image into high and low frequency components. High frequency components define contrast of an image. Enhancement is done in two steps namely local enhancement and global enhancement. Local enhancement is based on contrast measure and improves contrast. Global enhancement is needed for overall image quality improvement. HSV colour space is used of which V components will undergo enhancement, S component will undergo histogram equalization, and H remains the same for preserving the colour.