A method and apparatus for compressing data is described. In one embodiment, a processor receives one or more strings of data to be compressed. Duplicate strings are replaced with pointers using a first compression algorithm. An output of the first compression algorithm is processed with a second compression algorithm using a variable context dynamic encoder to generate a tree of non-overlapping bit-sequences where the length of each sequence is being inversely proportional of the likelihood of that symbol needing to be encoded. Unused symbols are not generated on the tree.