Despite rapid progress in improving mass-storage density and digital communication system performance, compression of hydroacoustic image data is still significant in many engineering and research areas since it can overcome data storage and transmission bandwidth limitations. In this paper, we present a novel and effective approach for lossless compression of hydroacoustic image data which consists of two stages. The first stage reduces the information redundancy. We propose several new techniques to remove redundancy between data samples, data blocks, and data frames. The second stage uses a newly developed cascade coding scheme. This simple scheme can achieve an efficiency of 97%. A decomposition algorithm is presented for finding the optimal cascade coding parameters. The algorithm decomposes a multivariable optimization problem into a series of one-variable optimizations. Our two-stage algorithm offers a compression ratio of 2-3 and provides an exact recovery of the original data. Because of its simplicity, the algorithm can be incorporated into a variety of echo sounder systems. The compression algorithms can also be implemented using low-level assembly language to meet the requirements of real-time applications.