PHP GD library
If you have the GD library (available at » http://www.libgd.org/) you will also be able to create and manipulate images.
The format of images you are able to manipulate depend on the version of GD you install, and any other libraries GD might need to access those image formats. Versions of GD older than gd-1.6 support GIF format images, and do not support PNG, where versions greater than gd-1.6 and less than gd-2.0.28 support PNG, not GIF. GIF support was re-enabled in gd-2.0.28.
More infomation about GD Library.