diff --git a/configure b/configure
index 650c219a..0e4d907f 100755
--- a/configure
+++ b/configure
@@ -4893,7 +4893,232 @@ fi
 done
 
 fi
+BZLIBSUP=No
+echo "$as_me:$LINENO: checking for BZ2_bzCompressInit in -lbz2" >&5
+echo $ECHO_N "checking for BZ2_bzCompressInit in -lbz2... $ECHO_C" >&6
+if test "${ac_cv_lib_bz2_BZ2_bzCompressInit+set}" = set; then
+  echo $ECHO_N "(cached) $ECHO_C" >&6
+else
+  ac_check_lib_save_LIBS=$LIBS
+LIBS="-lbz2  $LIBS"
+cat >conftest.$ac_ext <<_ACEOF
+/* confdefs.h.  */
+_ACEOF
+cat confdefs.h >>conftest.$ac_ext
+cat >>conftest.$ac_ext <<_ACEOF
+/* end confdefs.h.  */
 
+/* Override any gcc2 internal prototype to avoid an error.  */
+#ifdef __cplusplus
+extern "C"
+#endif
+/* We use char because int might match the return type of a gcc2
+   builtin and then its argument prototype would still apply.  */
+char BZ2_bzCompressInit ();
+int
+main ()
+{
+BZ2_bzCompressInit ();
+  ;
+  return 0;
+}
+_ACEOF
+rm -f conftest.$ac_objext conftest$ac_exeext
+if { (eval echo "$as_me:$LINENO: \"$ac_link\"") >&5
+  (eval $ac_link) 2>conftest.er1
+  ac_status=$?
+  grep -v '^ *+' conftest.er1 >conftest.err
+  rm -f conftest.er1
+  cat conftest.err >&5
+  echo "$as_me:$LINENO: \$? = $ac_status" >&5
+  (exit $ac_status); } &&
+	 { ac_try='test -z "$ac_c_werror_flag"
+			 || test ! -s conftest.err'
+  { (eval echo "$as_me:$LINENO: \"$ac_try\"") >&5
+  (eval $ac_try) 2>&5
+  ac_status=$?
+  echo "$as_me:$LINENO: \$? = $ac_status" >&5
+  (exit $ac_status); }; } &&
+	 { ac_try='test -s conftest$ac_exeext'
+  { (eval echo "$as_me:$LINENO: \"$ac_try\"") >&5
+  (eval $ac_try) 2>&5
+  ac_status=$?
+  echo "$as_me:$LINENO: \$? = $ac_status" >&5
+  (exit $ac_status); }; }; then
+  ac_cv_lib_bz2_BZ2_bzCompressInit=yes
+else
+  echo "$as_me: failed program was:" >&5
+sed 's/^/| /' conftest.$ac_ext >&5
+
+ac_cv_lib_bz2_BZ2_bzCompressInit=no
+fi
+rm -f conftest.err conftest.$ac_objext \
+      conftest$ac_exeext conftest.$ac_ext
+LIBS=$ac_check_lib_save_LIBS
+fi
+echo "$as_me:$LINENO: result: $ac_cv_lib_bz2_BZ2_bzCompressInit" >&5
+echo "${ECHO_T}$ac_cv_lib_bz2_BZ2_bzCompressInit" >&6
+if test $ac_cv_lib_bz2_BZ2_bzCompressInit = yes; then
+  result=yes
+else
+  result=no
+fi
+
+if test "$result" = "yes"; then
+  LIBS="$LIBS -lbz2"
+
+for ac_header in bzlib.h
+do
+as_ac_Header=`echo "ac_cv_header_$ac_header" | $as_tr_sh`
+if eval "test \"\${$as_ac_Header+set}\" = set"; then
+  echo "$as_me:$LINENO: checking for $ac_header" >&5
+echo $ECHO_N "checking for $ac_header... $ECHO_C" >&6
+if eval "test \"\${$as_ac_Header+set}\" = set"; then
+  echo $ECHO_N "(cached) $ECHO_C" >&6
+fi
+echo "$as_me:$LINENO: result: `eval echo '${'$as_ac_Header'}'`" >&5
+echo "${ECHO_T}`eval echo '${'$as_ac_Header'}'`" >&6
+else
+  # Is the header compilable?
+echo "$as_me:$LINENO: checking $ac_header usability" >&5
+echo $ECHO_N "checking $ac_header usability... $ECHO_C" >&6
+cat >conftest.$ac_ext <<_ACEOF
+/* confdefs.h.  */
+_ACEOF
+cat confdefs.h >>conftest.$ac_ext
+cat >>conftest.$ac_ext <<_ACEOF
+/* end confdefs.h.  */
+$ac_includes_default
+#include <$ac_header>
+_ACEOF
+rm -f conftest.$ac_objext
+if { (eval echo "$as_me:$LINENO: \"$ac_compile\"") >&5
+  (eval $ac_compile) 2>conftest.er1
+  ac_status=$?
+  grep -v '^ *+' conftest.er1 >conftest.err
+  rm -f conftest.er1
+  cat conftest.err >&5
+  echo "$as_me:$LINENO: \$? = $ac_status" >&5
+  (exit $ac_status); } &&
+	 { ac_try='test -z "$ac_c_werror_flag"
+			 || test ! -s conftest.err'
+  { (eval echo "$as_me:$LINENO: \"$ac_try\"") >&5
+  (eval $ac_try) 2>&5
+  ac_status=$?
+  echo "$as_me:$LINENO: \$? = $ac_status" >&5
+  (exit $ac_status); }; } &&
+	 { ac_try='test -s conftest.$ac_objext'
+  { (eval echo "$as_me:$LINENO: \"$ac_try\"") >&5
+  (eval $ac_try) 2>&5
+  ac_status=$?
+  echo "$as_me:$LINENO: \$? = $ac_status" >&5
+  (exit $ac_status); }; }; then
+  ac_header_compiler=yes
+else
+  echo "$as_me: failed program was:" >&5
+sed 's/^/| /' conftest.$ac_ext >&5
+
+ac_header_compiler=no
+fi
+rm -f conftest.err conftest.$ac_objext conftest.$ac_ext
+echo "$as_me:$LINENO: result: $ac_header_compiler" >&5
+echo "${ECHO_T}$ac_header_compiler" >&6
+
+# Is the header present?
+echo "$as_me:$LINENO: checking $ac_header presence" >&5
+echo $ECHO_N "checking $ac_header presence... $ECHO_C" >&6
+cat >conftest.$ac_ext <<_ACEOF
+/* confdefs.h.  */
+_ACEOF
+cat confdefs.h >>conftest.$ac_ext
+cat >>conftest.$ac_ext <<_ACEOF
+/* end confdefs.h.  */
+#include <$ac_header>
+_ACEOF
+if { (eval echo "$as_me:$LINENO: \"$ac_cpp conftest.$ac_ext\"") >&5
+  (eval $ac_cpp conftest.$ac_ext) 2>conftest.er1
+  ac_status=$?
+  grep -v '^ *+' conftest.er1 >conftest.err
+  rm -f conftest.er1
+  cat conftest.err >&5
+  echo "$as_me:$LINENO: \$? = $ac_status" >&5
+  (exit $ac_status); } >/dev/null; then
+  if test -s conftest.err; then
+    ac_cpp_err=$ac_c_preproc_warn_flag
+    ac_cpp_err=$ac_cpp_err$ac_c_werror_flag
+  else
+    ac_cpp_err=
+  fi
+else
+  ac_cpp_err=yes
+fi
+if test -z "$ac_cpp_err"; then
+  ac_header_preproc=yes
+else
+  echo "$as_me: failed program was:" >&5
+sed 's/^/| /' conftest.$ac_ext >&5
+
+  ac_header_preproc=no
+fi
+rm -f conftest.err conftest.$ac_ext
+echo "$as_me:$LINENO: result: $ac_header_preproc" >&5
+echo "${ECHO_T}$ac_header_preproc" >&6
+
+# So?  What about this header?
+case $ac_header_compiler:$ac_header_preproc:$ac_c_preproc_warn_flag in
+  yes:no: )
+    { echo "$as_me:$LINENO: WARNING: $ac_header: accepted by the compiler, rejected by the preprocessor!" >&5
+echo "$as_me: WARNING: $ac_header: accepted by the compiler, rejected by the preprocessor!" >&2;}
+    { echo "$as_me:$LINENO: WARNING: $ac_header: proceeding with the compiler's result" >&5
+echo "$as_me: WARNING: $ac_header: proceeding with the compiler's result" >&2;}
+    ac_header_preproc=yes
+    ;;
+  no:yes:* )
+    { echo "$as_me:$LINENO: WARNING: $ac_header: present but cannot be compiled" >&5
+echo "$as_me: WARNING: $ac_header: present but cannot be compiled" >&2;}
+    { echo "$as_me:$LINENO: WARNING: $ac_header:     check for missing prerequisite headers?" >&5
+echo "$as_me: WARNING: $ac_header:     check for missing prerequisite headers?" >&2;}
+    { echo "$as_me:$LINENO: WARNING: $ac_header: see the Autoconf documentation" >&5
+echo "$as_me: WARNING: $ac_header: see the Autoconf documentation" >&2;}
+    { echo "$as_me:$LINENO: WARNING: $ac_header:     section \"Present But Cannot Be Compiled\"" >&5
+echo "$as_me: WARNING: $ac_header:     section \"Present But Cannot Be Compiled\"" >&2;}
+    { echo "$as_me:$LINENO: WARNING: $ac_header: proceeding with the preprocessor's result" >&5
+echo "$as_me: WARNING: $ac_header: proceeding with the preprocessor's result" >&2;}
+    { echo "$as_me:$LINENO: WARNING: $ac_header: in the future, the compiler will take precedence" >&5
+echo "$as_me: WARNING: $ac_header: in the future, the compiler will take precedence" >&2;}
+    (
+      cat <<\_ASBOX
+## ------------------------------------------ ##
+## Report this to the AC_PACKAGE_NAME lists.  ##
+## ------------------------------------------ ##
+_ASBOX
+    ) |
+      sed "s/^/$as_me: WARNING:     /" >&2
+    ;;
+esac
+echo "$as_me:$LINENO: checking for $ac_header" >&5
+echo $ECHO_N "checking for $ac_header... $ECHO_C" >&6
+if eval "test \"\${$as_ac_Header+set}\" = set"; then
+  echo $ECHO_N "(cached) $ECHO_C" >&6
+else
+  eval "$as_ac_Header=\$ac_header_preproc"
+fi
+echo "$as_me:$LINENO: result: `eval echo '${'$as_ac_Header'}'`" >&5
+echo "${ECHO_T}`eval echo '${'$as_ac_Header'}'`" >&6
+
+fi
+if test `eval echo '${'$as_ac_Header'}'` = yes; then
+  cat >>confdefs.h <<_ACEOF
+#define `echo "HAVE_$ac_header" | $as_tr_cpp` 1
+_ACEOF
+ BZLIBSUP=Yes
+else
+  BZLIBSUP=No
+fi
+
+done
+
+fi
 
 
 if test "$SYSTEM" = "NetBSD"; then
@@ -10332,6 +10557,7 @@ echo "$as_me:$LINENO: result:
 
     Version : ..................... ${VERSION}
     Hydra/Binkp zlib compression :  ${ZLIBSUP}
+    Binkp bzlib compression : ..... ${BZLIBSUP}
     Full newsgate : ............... ${NEWSGATE}
     Delete key : .................. ${DEL}
 
@@ -10343,6 +10569,7 @@ echo "${ECHO_T}
 
     Version : ..................... ${VERSION}
     Hydra/Binkp zlib compression :  ${ZLIBSUP}
+    Binkp bzlib compression : ..... ${BZLIBSUP}
     Full newsgate : ............... ${NEWSGATE}
     Delete key : .................. ${DEL}
 
diff --git a/configure.in b/configure.in
index 939a56df..c9780f5f 100644
--- a/configure.in
+++ b/configure.in
@@ -180,7 +180,7 @@ fi
 
 
 dnl
-dnl Support for zlib transfers compression
+dnl Support for zlib and bzlib transfers compression
 dnl
 ZLIBSUP=No
 AC_CHECK_LIB(z,compress2,result=yes,result=no)
@@ -188,7 +188,12 @@ if test "$result" = "yes"; then
   LIBS="$LIBS -lz"
   AC_CHECK_HEADERS(zlib.h,ZLIBSUP=Yes,ZLIBSUP=No)
 fi
-
+BZLIBSUP=No
+AC_CHECK_LIB(bz2,BZ2_bzCompressInit,result=yes,result=no)
+if test "$result" = "yes"; then
+  LIBS="$LIBS -lbz2"
+  AC_CHECK_HEADERS(bzlib.h,BZLIBSUP=Yes,BZLIBSUP=No)
+fi
 
 dnl
 dnl The last library to add, according to Sun the -lpthread must be the
@@ -305,22 +310,6 @@ else
 fi
 AC_DEFINE_UNQUOTED(GBK_DEL,$GBK_DEL)
 
-dnl
-dnl AC_ARG_WITH(log-compress,[  --with-log-compress=METHOD   Log compression method (default gzip)], LOG_COMPRESS=$with_log_compress, LOG_COMPRESS=gzip)
-dnl case "$LOG_COMPRESS" in
-dnl gzip)
-dnl         LOG_COMPRESS=$GZIP
-dnl         LOG_COMPRESSEXT=".gz" ;;
-dnl compress)
-dnl         LOG_COMPRESS=$COMPRESS
-dnl         LOG_COMPRESSEXT=".Z" ;;
-dnl *)
-dnl         LOG_COMPRESS=$LOG_COMPRESS
-dnl         LOG_COMPRESSEXT=".unknown" ;;
-dnl esac
-dnl AC_SUBST(LOG_COMPRESS)
-dnl AC_SUBST(LOG_COMPRESSEXT)
-dnl
 
 AC_MSG_CHECKING(location of joe editor)
 for joebin in /usr/bin /usr/local/bin /usr/pkg/bin NONE; do
@@ -397,6 +386,7 @@ AC_MSG_RESULT([
 
     Version : ..................... ${VERSION}
     Hydra/Binkp zlib compression :  ${ZLIBSUP}
+    Binkp bzlib compression : ..... ${BZLIBSUP}
     Full newsgate : ............... ${NEWSGATE}
     Delete key : .................. ${DEL}
 
diff --git a/lib/mbselib.h b/lib/mbselib.h
index ed0b7753..af8b6c11 100644
--- a/lib/mbselib.h
+++ b/lib/mbselib.h
@@ -89,6 +89,9 @@
 #ifdef	HAVE_ZLIB_H
 #include <zlib.h>
 #endif
+#ifdef	HAVE_BZLIB_H
+#include <bzlib.h>
+#endif
 #include <pthread.h>
 #if !defined(__ppc__)
 #include <sys/poll.h>
diff --git a/mbcico/binkp.c b/mbcico/binkp.c
index 6bd0b503..6d1d9c85 100644
--- a/mbcico/binkp.c
+++ b/mbcico/binkp.c
@@ -1585,7 +1585,7 @@ TrType binkp_transmitter(void)
 	    sz = bp.tfsize - ftell(bp.txfp);
 	    if (bp.cmpblksize < sz)
 		sz = bp.cmpblksize;
-	    Syslog('b', "Binkp: sz=%d", sz);
+//	    Syslog('b', "Binkp: sz=%d", sz);
 	    while (TRUE) {
 		ocnt = bp.cmpblksize - nput;
 		nget = sz;
@@ -1594,7 +1594,7 @@ TrType binkp_transmitter(void)
 		fleft = bp.tfsize - ftell(bp.txfp);
 		fseek(bp.txfp, bp.txpos, SEEK_SET);
 		nget = fread(bp.z_obuf, 1, nget, bp.txfp);
-		Syslog('b', "Binkp: fread pos=%d nget=%d ocnt=%d", bp.txpos, nget, ocnt);
+//		Syslog('b', "Binkp: fread pos=%d nget=%d ocnt=%d", bp.txpos, nget, ocnt);
 		rc2 = do_compress(bp.tmode, bp.txbuf + nput, &ocnt, bp.z_obuf, &nget, fleft ? 0 : 1, bp.z_odata);
 		Syslog('b', "Binkp: do_compress ocnt=%d nget=%d fleft=%d rc=%d", ocnt, nget, fleft, rc2);
 		if (rc2 == -1) {
@@ -1604,17 +1604,25 @@ TrType binkp_transmitter(void)
 		bp.txpos += nget;
 		bp.txcpos += ocnt;
 		nput += ocnt;
-		Syslog('b', "Binkp: txpos=%d txcpos=%d nput=%d", bp.txpos, bp.txcpos, nput);
+//		Syslog('b', "Binkp: txpos=%d txcpos=%d nput=%d", bp.txpos, bp.txcpos, nput);
     
+		/*
+		 * Compressed block is filled for transmission
+		 */
 		if ((nput == bp.cmpblksize) || (fleft == 0)) {
-		    rc = binkp_send_frame(FALSE, bp.txbuf, nput);
+		    bp.txlen = nput;
+		    rc = binkp_send_frame(FALSE, bp.txbuf, bp.txlen);
 		    if (rc)
 			return Failure;
-		    nput = 0;
-		    sentbytes += nput;
-		}
-		if (rc2 == 1) {
-		    eof = TRUE;
+		    sentbytes += bp.txlen;
+		    
+		    if (rc2 == 1) {
+			/*
+			 * Last compressed block is sent, set eof.
+			 */
+			eof = TRUE;
+			bp.txcompressed = bp.tfsize - bp.txcpos;
+		    }
 		    break;
 		}
 	    }