Lossless JPEG is a 1993 addition to JPEG standard by the Joint Photographic Experts Group to enable lossless compression. However, it might be used as an umbrella term to refer to all lossless compression schemes developed by the Joint Photographic Expert group. They include JPEG 2000 and JPEG-LS.
Lossless JPEG was developed as a late addition to JPEG in 1993, using a completely different technique from the lossy JPEG standard. It uses a predictive scheme based on the three nearest (causal) neighbors (upper, left, and upper-left), and entropy coding is used on the prediction error. The standard Independent JPEG Group libraries cannot encode or decode it, but Ken Murchison of Oceana Matrix Ltd. wrote a patch that extends the IJG library to handle Lossless JPEG. Lossless JPEG has some popularity in medical imaging, and is used in DNG and some digital cameras to compress raw images, but otherwise was never widely adopted.
Lossless JPEG is actually a mode of operation of JPEG. This mode exists because the discrete cosine transform (DCT) based form cannot guarantee that encoder input would exactly match decoder output. Unlike the lossy mode which is based on the DCT, the lossless coding process employs a simple predictive coding model called differential pulse code modulation (DPCM). This is a model in which predictions of the sample values are estimated from the neighboring samples that are already coded in the image. Most predictors take the average of the samples immediately above and to the left of the target sample. DPCM encodes the differences between the predicted samples instead of encoding each sample independently. The differences from one sample to the next are usually close to zero. A typical DPCM encoder is displayed in Fig.1. The block in the figure acts as a storage of the current sample which will later be a previous sample.
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