Libbzip2 compresses files using the Burrows-Wheeler block-sorting text compression algorithm, and Huffman coding. Compression is generally considerably better than that achieved by more conventional LZ77/LZ78-based compressors, and approaches the performance of the PPM family of statistical compressors.
A inline manual describes both how to work with the primary library interface and Delphi encapsulation.
You can download the Free ZIP file HERE (Ko).
The official libbzip2 / bzip2 page is at http://sources.redhat.com/bzip2 (John SEWARD's page).