A new approach for wavelet-based demosaicing of color filter array (CFA) images is presented. It is observed that conventional wavelet-based demosaicing results in demosaicing artifacts in high spatial frequency regions of the image. By proposing a framework of locally adaptive demosaicing in the wavelet domain, the presented method proposes computationally simple techniques to avoid these artifacts. In order to reduce computation time and memory requirements even more, we propose the use of the dual tree complex wavelet transform. The results show that wavelet-based demosaicing, using the proposed locally adaptive framework, is visually comparable with state-of-the-art pixel based demosaicing. This result is very promising when considering a low complexity wavelet-based demosaicing and denoising approach.