Proposed is a two-stage image compression method for wireless capsule endoscopy images to provide high compression rate and high image quality. The first stage, implemented inside the wireless capsule, contains a very low complexity integer transform followed by an optimised quantisation and Huffman encoding. The second stage is a simple post-processing for high subjective visual quality of the reconstructed image, which is applied outside the capsule. The compression method can provide not only high compression rate (86%) and high image quality (39.2%dB), but also low computation complexity.