We describe and evaluate an information-theoretic algorithm for data-driven induction of classification models based on a minimal subset of available features. The relationship between input (predictive) features and the target (classification) attribute is modeled by a tree-like structure termed an information network (IN). Unlike other decision-tree models, the information network uses the same input attribute across the nodes of a given layer (level). The input attributes are selected incrementally by the algorithm to maximize a global decrease in the conditional entropy of the target attribute. We are using the prepruning approach: when no attribute causes a statistically significant decrease in the entropy, the network construction is stopped. The algorithm is shown empirically to produce much more compact models than other methods of decision-tree learning while preserving nearly the same level of classification accuracy.