This invention is a system and a method for operating a storage server to provide read or write access to a data in a data network using a new architecture. The method of creating virtual block mapping pointer in response to a request by a client of the storage server to de-duplicate the file system data block or to allow compression of one or more file system data blocks into one or more physical data blocks. Further, the method relocates one or more file system data blocks from one part of the file system address space to another by using one or more virtual block mapping pointers that provides the mapping information for the one or more file system data blocks that are being relocated. The virtual block mapping pointer allows relocating of file system data blocks by same number of metadata operations regardless of number of files sharing the block that are being relocated and the state of those blocks (compressed or not).