Abstract : This report continues the work published in the prior interim report, NRL/MR/8l4O.2-95-7742. It presents the interim development of a compression and decompression system, including tests of effectiveness on selected digitized packet streams. Blocks of packets are grouped by packet type, and are broken up into separate compression streams on bit field boundaries. 18 lossless compression algorithms are examined for effectiveness. These algorithms are able to compress most of the data available with a good compression factor, except on encrypted data.