We describe a novel text compressor which combines Ziv-Lempel compression and arithmetic coding with a form of vector quantisation. The resulting compressor resembles an LZ-77 compressor, but with no explicit phrase lengths or coding for literans. An examination of the limitations on its performance leads to some predictions of the limits of LZ-77 compression in general, showing that the LZ-77 text compression technique is already very close to the limits of its performance.

text compression, LZ-77, arithmetic coding, vector quantisation