A system and method for concurrent encryption and lossless compression of data with an algorithm executing on a computer platform. The lossless compression component of the algorithm consists of preprocessing the data with a Burrows-Wheeler transformation followed by an inversion ranking transformation in advance of employing an entropy coder, such as binary arithmetic coder. The frequency vector of the Inversion Ranking transformation is then encrypted and transmitted along with the compressed data with only the frequency vector encrypted. Since the frequency vector is required for decompression, no further encryption of the compressed data is necessary to secure the compressed file.