Data compression plays a vital and pivotal role in the process of computing as it helps in space reduction occupied by a file as well as to reduce the time taken to access the file. This work relates to a method for compressing and decompressing a UTF-8 encoded stream of data pertaining to Lempel-Ziv-welch (LZW) method. It is worth to use an exclusive-purpose LZW compression scheme as many applications are utilizing Unicode text. The system of the present work comprises a compression module, configured to compress the Unicode data by creating the dictionary entries in Unicode format. This is accomplished with adaptive characteristic data compression tables built upon the data to be compressed reflecting the characteristics of the most recent input data. The decompression module is configured to decompress the compressed file with the help of unique Unicode character table obtained from the compression module and the encoded output. We can have remarkable gain in compression, wherein the knowledge that we gather from the source is used to explore the decompression process.