A method and apparatus for compressing digital data, particularly audio and other data, in a way that the packing method used can be automatically detected and decoded at the receiving station. The audio signal is divided into compression packets consisting of four word pairs of left and right words. The first word pair in each compression packet is tagged with an identifier to indicate the start of a new compression packet, and is provided with configuration information which, over an entire compression block of 48 compression packets, constructs a 48-bit word specifying the manner in which the compressed audio and other data is packed. The method and apparatus of the invention is able to compress digital audio and other data to accommodate 16-, 20-and 24-bit resolutions and transmit up to eight channels of audio information in a variety of formats, and makes more efficient use of available bandwidth in the 16-, 20-or 24-bit output by allowing other information to be embedded into the least significant bits of the remaining available compression packet space which would otherwise be dropped.