compression algorithms reduce the redundancy in data representation to decrease the storage required for that data. Data compression offers an attractive approach to reducing communication costs by using available bandwidth effectively. Dictionary-based code compression techniques are popular as they offer both good compression ratio and fast decompression scheme. XML is a popular self describing meta-language in widespread use across a variety of application domains. Being self describing grants XML its great flexibility and wide acceptance but on the other hand it is the cause of its main drawback that of being huge in size. The huge document size means that the amount of information that has to be transmitted, processed, stored, and queried is often larger than that of other data formats. The basic strategy proposed in this paper is to preprocess the XML document and transform it into some intermediate form by using an dictionary based approach which can then compressed by BWT ( transforms a block of data into a format that is extremely well suited for compression.) With better efficiency and which exploits the natural redundancy of the language in making the transformation.