This paper is a revision of a paper presented at the SPIE conference on Algorithms and Systems for Optical Processing V, Jul. 2001, San Diego, California. The paper presented there appears (unrefereed) in SPIE Proceedings Vol. 4471. An encrypted digital holographic data reconstruction method with data compression is proposed. We show that the number of quantization levels of the digital hologram can be reduced. By computer simulations, we confirm that the method is especially useful for binary images. For gray-scale images, we propose a bit plane decomposition method. By this method, we show that both high reconstructed image quality and a high compression ratio can be achieved.
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