The fusion of images is the process of combining two or more images into a single image retaining important features from each of the images. A scheme for fusion of multi-resolution 2D gray level images based on wavelet transform is presented in this paper. If the images are not already registered, a point-based registration, using affine transformation is performed prior to fusion. The images to be fused are first decomposed into sub images with different frequency and then information fusion is performed using these images under the proposed gradient and relative smoothness criterion. Finally these sub images are reconstructed into the result image with plentiful information. A quantitative measure of the degree of fusion is estimated by cross-correlation coefficient and comparison with some of the existing wavelet transform based image fusion techniques is carried out.