We consider an image transmission system consisting of set partitioning in hierarchical trees (SPIHT) wavelet-based source coding, and list Viterbi algorithm (LVA) channel coding using rate compatible punctured convolutional (RCPC) codes. Our goal is to minimize bandwidth usage while maintaining received image quality. We introduce an outage criterion for image transmission. A received image is considered to be in outage if its pixel values are not identical to the image transmitted. In order to reduce correlation in fading, an enhanced block interleaving scheme employing a subblock structure is proposed. Using RCPC codes, we devise a variable rate channel coding system based on the current channel state information. Combining enhanced interleaving and variable rate channel coding, we construct a method to select the highest rate RCPC code that satisfies the image outage criterion, thus balancing the requirements of high bandwidth efficiency and high image quality.