A new protection system for power transmission lines is presented based on a d-q wavelet hybrid technique (dqWPT). This hybrid technique is developed via the integration of the d-q axis transformation with the wavelet packet transform (WPT). In this proposed method, fault and transient current signals are obtained experimentally. The data compression analysis is carried out using wavelet decomposition and reconstruction based signal processing for the selection of the optimal number of levels of approximations (a) and details (d) for the selected kind of mother wavelets. For optimum choice and faster response of the protection system, the number of levels should be maintained at a minimum level. In order to select the best mother wavelet, the minimum description length (MDL) is used in this paper. The pertinent detailed analyses are briefly summarized in this paper. Sample simulations and measured results of a laboratory transmission line model for various kinds of faults are presented in order to validate the novelty of this new method. Finally, the optimal number of decomposition levels required for transmission line protection system is discussed.