FORM DROPOUT COMPRESSION METHOD WHICH HANDLES FORM WHITE-OUT AND WRITI NG IN SHADED AND WHITE-OUT AREAS OF THE FORM

An improved method is disclosed of compressing, for storage or transmission, the information contained in a bi-level digitized input image by separate handling of a corresponding template image and a compressed image, which method is capable of handling "white-out" areas of the image. In accordance with the method, the template image is subtracted from the input image to generate the compressed image, the subtraction is characterized in that the subtraction step determines, for each pixel, whether the pixel is a "removed pixel" and, if so, the pixel is assigned to be black in the compressed image. A pixel is a "removed pixel" if the corresponding pixel in the template image is black, and the corresponding pixel in the input image is white.