Method and system for improving lossless compression efficiency

A method and system for increasing compression efficiency of a lossless data compression utility. The data compression utility compresses a segmented input data stream into independently decompressible data blocks, and includes a history buffer that maintains a history of matching character sequences. In accordance with the method of the present invention, a data segment is compressed utilizing a history buffer to identify repeated character sequences within the data segment. Upon receipt of a next data segment to be compressed, the history buffer is updated to include a pre-selected data set and reset data from the next data segment. As part of the compression an adaptable cache is searched for non-repeating bytes within a next data segment. Matching bytes are coded as cache references. Further efficiency is obtained by processing the next data segment as two-byte pairs.