Traditional lapped transform domain excision techniques obtain good performance at the expense of increased processing delay. Extension of transform domain filtering techniques to the lapped biorthogonal transform domain can help solve the problem. By incorporating biorthogonality into the lapped transforms, more flexibility is obtained in the design of windows. Thus transform bases with better stopband attenuation can be generated by designing windows, but not by increasing the overlapping factor. In this paper, a new modulated lapped biorthogonal transform (MLBT) with optimized windows is introduced for efficient compression of multi-tone interfering signal energy. The bit error rate (BER) performance of the receiver employing the proposed MLBT excision technique is analyzed and compared with that of the lapped transform domain excision-based receivers. Simulation results demonstrate the improved performance and increased robustness of the proposed technique.