[Wlug] interesting backups problem

Hi all, I've got an interesting issue with disk usage. I have a hard disk image (from dd) stored on a server, and it needs to be compressed it to make room for other data. The image is 160 GB, but I only have 30 GB of free space to work with; the data isn't compressible enough to fit in 30 GB in the meantime. I don't need the image right now and having only a compressed copy is perfectly fine. How can I compress the image while simultaneously deleting the old data? I can think of a way to do it using perl, dd, and some other tools, but I'd much prefer to do it the "right" way if there is one. Eric