Method and system for compressing a data packet is provided. The method includes receiving a data packet; comparing the data packet with content stored in a history module; wherein plural comparisons are performed in parallel; generating a plurality of masks based on the comparisons; comparing the plurality of masks; selecting one of the plurality of masks, based on the mask comparison; and generating a compression record, wherein the compression record includes; size of a data packet, an address field, a mask field and data; and a data packet header includes a control bit indicating if the data packet is compressed.