This paper proposes an automatic variable block truncation coding (BTC) method. It selects the block size automatically based on the mode of the discontinutiy measure of blocks. The combination of an automatic block-size determination scheme and the conventional BTC results in the proposed automatic variable BTC techniques. For color images, subsampling in I and Q chrominance components is adopted along with the variable BTC. To show the effectiveness of the proposed algorithm, its simulation results are compared to those of the several conventional BTC algorithms for monochrome and color test images. Computer simulation shows that the proposed algorithm gives better performance than the conventional ones based on the subjective and objective performance evaluation.