For low bit-rate compression applications, segmentation-based coding methods provide, in general, high compression ratios when compared with traditional (e.g., transform and subband) coding approaches. In this paper, we present a new segmentation-based image coding method that divides the desired image using binary space partitioning (BSP). The BSP approach partitions the desired image recursively by arbitrarily oriented lines in a hierarchical manner. This recursive partitioning generates a binary tree, which is referred to as the BSP-tree representation of the desired image. The most critical aspect of the BSP-tree method is the criterion used to select the partitioning lines of the BSP tree representation, In previous works, we developed novel methods for selecting the BSP-tree lines, and showed that the BSP approach provides efficient segmentation of images. In this paper, we describe a hierarchical approach for coding the partitioning lines of the BSP-tree representation. We also show that the image signal within the different regions (resulting from the recursive partitioning) can be represented using low-order polynomials. Furthermore, we employ an optimum pruning algorithm to minimize the bit rate of the BSP tree representation (for a given budget constraint) while minimizing distortion. Simulation results and comparisons with other compression methods are also presented.