A method includes receiving an input data stream at a processor, and for each byte sequence from a plurality of byte sequences of the input data stream, a hash is generated and compared to a hash table to determine whether a match exists. If a match exists, that byte sequence is incrementally expanded to include one or more additional adjacent bytes from the input data stream, to produce multiple expanded byte sequences. Each of the expanded byte sequences is compared to the hash table to identify a maximum-length matched byte sequence from a set that includes the byte sequence and the plurality of expanded byte sequences. A representation of the maximum-length matched byte sequence is stored in the memory. If a match does not exist, a representation of that byte sequence is stored as a byte sequence literal in the memory.