In this paper we propose a novel stereo image coding technique, which uses an architecture similar to that of a Discrete Cosine Transform (DCT) based baseline JPEG-CODEC [1], but effectively replaces the DCT technology by the more recently popularized Discrete Wavelet Transform (DWT) technology. We show that as a result of this hybrid design, which combines the advantage of two popular technologies, the proposed CODEC has improved rate distortion and subjective image quality performance as compared to DCT based stereo image compression techniques [2,3]. In particular, at very low bit rates (0.15 bpp), we report peak-signal-to-noise-ratio (PSNR) gains of up to 3.66 dB, whereas at higher bit rates we report gains in the order of 1 dB.