Lossless compression is preferred for the compact representation of medical images. In general, single compression algorithms are not that effective compared to the hybrid compression algorithm where several compression algorithms are collectively used properly to realize better compression. In this paper, the Burrows–Wheeler Transform (BWT) is applied at a block level for each bit plane of the medical images. Thus, this process identifies highly correlated binary streams, and subsequently, the obtained binary streams are further encoded through the modified Run Length Encoding (RLE). The probability of RLE is calculated for each bit plane and used subsequently to perform Huffman coding on each bit plane individually. The DICOM category of medical images and some images that are represented by 8-bit planes are used for the validation of the above approach. It is found that the present approach yields significantly better compression than that obtained with the standalone lossless compression algorithm that is Huffman coding and the conventional BWT-based lossless image compression algorithm.