This paper presents a new speech recognition system using wavelet analysis. The framework of the system based on wavelet analysis is described with the efficiency and accuracy considered. The proposed system has following advantages comparing to conventional speech recognition systems based on short time Fourier transform : the non-stationary noise such as impulsive noise can be extracted and reduced, the database for speech recognition can be effectively compressed, and high recognition accuracy can be obtained for the burst speech which conventional systems have never been able to well recognize. Furthermore, the influence of data compression on recognition accuracy and recognition speed is examined.