WordPress used to ship with an option to compress (via gzip compression) the blog content. Now with WordPress 2.5 this options is gone.

Almost any webserver now can deal with some kind of compression, even shared hosting plans supports it quite everywhere, optional or built-in (even CPanel does it). Ryan Boren said:

Yes, the option gone. WP doesn’t try to do compression, so you shouldn’t need to turn it off. We leave compression as a decision for the server.

If your server doesn’t support it, you can check if you php ships with Output Control Buffers, and either activate it via an .htaccess (if supported):

or make something like this in your index.php:

Thanks goes to Elliot C. Back for this solution. Frank Bueltge Sergej Müller has made Compress for WordPress 2.5 plugin that does pretty the same thing, so try it :-)

EDIT: as Andrew Ozz says in wp-testers:

if you turn on compression in php other than “zlib.output_compression = On” in php.ini, don’t forget to turn compression off in tiny_mce_config.php, as that will double-compress it.