The document describes an improved image encryption and compression system using error clustering and random permutation. It proposes a highly efficient image encryption-then-compression framework. The image encryption method works in the prediction error domain and can provide a reasonably high level of security. Notably, the proposed compression approach applied to encrypted images is only slightly worse than compressing unencrypted images. In contrast, most existing encryption-then-compression systems significantly reduce compression efficiency. The system includes image encryption by Alice, image compression by Charlie, and sequential decryption and decompression by Bob. It analyzes the security of the proposed permutation-based encryption method and efficiency of compressing encrypted data.