The performance of the wavelets in the field of image processing is well known. It is experimental with multiplicity of different images types are compressed using a fixed wavelet filter. In this work Integer Multiwavelet Transform (IMWT) algorithm for Lossy compression has been derived for three different types of images like Standard Lena, Satellite urban and Satellite rural. The IMWT shows high performance with reconstruction of the images. This work analyses the performance of the IMWT for lossy compression of images with Magnitude Set-Variable length Integer coding. The Transform coefficients are coded using the Magnitude set coding and run length Encoding techniques. The sign information of the coefficients is coded as bit plane with zero thresholds. The Peak Signal to Noise Ratios (PSNR) and Mean Square Error (MSE) obtained for Standard images using the Proposed IMWT lossy compression scheme. The effectiveness of the lossy compression method can be evaluated by examining the Image with 8-bit Gray (256×256) pixels. The results confirm that Standard Lena, Satellite rural and urban images are better suited for proposed scheme compared to that of Existing SPIHT (Set Partitioning in Hierarchical Trees) Lossy algorithm. The Simulation was done in Mat lab. ©2006-2015 Asian Research Publishing Network (ARPN).