The conventional application of mud transmission rate (about 1 b/s) is unable to meet the demand for real?time uploading of measurement parameters with the rapid development of logging while drilling(LWD) technology, while data compression technology is an effective method to improve the transmission rate. By analyzing the characteristics of the mud pulse signal and the experience of the field application, a data compression algorithm based on frame-to-frame difference is designed and applied in data coding and analytic processing. The practical application results show that the algorithm can effectively improve the transmission rate and save the data’s updating time, thus having a high popularize prospect.