A method for wavelet image representation, coding and compression, using nonseparable two-dimensional (2D) multiwavelet transform, is presented. The application of this approach results in 2D wavelet functions and filter-banks that are more suitable for coding of two-dimensional signals, such as images, than the traditional separable transform. In this work we deal mainly with the design of multiwavelets. The nonseparable approach permits the design of 2D multiwavelet with preferred orientations. We also present the nonlinear constraints on the polyphase matrix components which must be satisfied while imposing the requirement of vanishing moments.