LZ78 compression A {substitutional compression} scheme which works by entering phrases into a dictionary and then, when a reoccurrence of that particular phrase is found, outputting the dictionary index instead of the phrase. Several {algorithms} are based on this principle, differing mainly in the manner in which they manage the dictionary. The most well-known Lempel-Ziv scheme is Terry Welch's {Lempel-Ziv Welch} variant of LZ78. [comp.compression {FAQ}].