Thegeneralconceptofdatacompressionconsistsinremovingtheredundancyexistingindatatofindamorecompactrepresentation.Thispaperisconcernedwithanewmethodofcompressionusingthesecondgenerationwaveletsbasedontheliftingscheme,whichisasimplebutpowerfulwaveletconstructionmethod.Ithasbeenprovedbyitssuccessfulapplicationtoareal-timemonitoringsystemoflargehydraulicmachinesthatitisapromisingcompressionmethod.