In order to reduce the communication bandwidth and the transmitting power in the wireless endoscopy capsule, a high quality image compression algorithm has to be used. This paper proposes a new VLSI structure for the improved near-lossless color image compression algorithm to reduce the memory consumption 47% and save the power in the wireless endoscopy capsule. The improved compression algorithm can provide low average compression rate (2.12bits/pixel) with high image quality (larger than 53dB) for endoscopic images. The VLSI structure has been implemented in 0.18 mum CMOS process