A method and network element identify a set of bit indices for forming compressed keys, which are used to map a set of keys of corresponding input values to assigned lookup values in a hash table, where the keys of the input values have colliding hash values according to a hash function of the hash table. The method includes a set of steps including receiving the set of keys. The bits of the set of keys are traversed to find a best split bit index. The set of keys are split into two subsets according to the best split bit index. A check is made whether all of the set of keys have been split into separate subsets. A selected best split bit is added to a bit index. Alternate split bits are tallied and a bit is selected with a highest tally to add to bit index.