We present a fully automatic system for 2D model-based image coding of human faces for potential applications such as video telephony, database image compression, and face recognition. The system operates by locating a face in the input image, normalizing its scale and geometry and representing it in terms of a parametric image model obtained with a Karhunen-Loeve basis. This leads to a compact representation of the face that can be used for both recognition as well as image compression. Good-quality facial images are automatically generated using approximately 100-bytes worth of encoded data. The system has been successfully tested on a database of nearly 2000 facial photographs.