If you are searching for a compression software or archiever then 7-Zip is the best one. It's open source and free. You can download it from here. I have used 7-Zip 9.18 beta in Win XP as well as in Win 7.
Just select Ultra from compression level and I prefer using .7z format.
User interface of 7-Zip
I have myself tried it. I have compressed HALO game folder which is about 1.05Gb to just 338Mb using 7-Zip,...
