LZW Compression in Lua, rosetta-code style, also includes a 8-bit only mode for 7bit plain text strings.

lzw.lua

local lzw = {}

local function enc_reset(dict, size)
  for k, _ in pairs(dict) do dict[k] = nil end
  for i = 0, size-1 do dict[string.char(i)] = i end
  return dict
end

local function dec_reset(dict, size)
  for k, _ in pairs(dict) do dict[k] = nil end
  for i = 0, size-1 do dict[i] = string.char(i) end
  return dict
end

lzw.encode = function(message)
  local w, result, size = "", {}, 256
  local dict = enc_reset({}, size)
  for k in message:gmatch('.') do
    local wk = w .. k
    if dict[wk] then
      w = wk
    else
      result[#result+1] = dict[w]
      dict[wk] = size
      size = size + 1
      w = k
    end
  end
  if w:len() > 0 then
    result[#result+1] = dict[w]
  end
  return result
end

lzw.short_encode = function(message)
  local w, result, size = "", {}, 128
  local dict = enc_reset({}, size)
  for k in string.gmatch(message, '.') do
    local wk = w .. k
    if dict[wk] then
      w = wk
    else
      result[#result+1] = string.char(dict[w])
      dict[wk] = size
      size = size + 1
      if size == 256 then
        size = 128
        enc_reset(dict, size)
      end
      w = k
    end
  end
  if w:len() > 0 then
    result[#result+1] = string.char(dict[w])
  end
  return table.concat(result)
end

lzw.decode = function(cipher)
  local w, entry, result  = "", "", {}
  local size = 256
  local dict = dec_reset({}, size)
  w = string.char(cipher[1])
  result[1] = w
  for i = 2, #cipher do
    local codeword = cipher[i]
    if dict[codeword] then
      entry = dict[codeword]
    else
      entry = w .. w:sub(1,1)
    end
    dict[size] = w .. entry:sub(1, 1)
    result[#result+1], w, size = entry, entry, size + 1
  end
  return table.concat(result)
end

lzw.short_decode = function(cipher)
  local w, entry, result, size = "", "", {}, 128
  local dict = dec_reset({}, size)
  w = cipher:sub(1, 1)
  result[1] = w
  for i = 2, cipher:len() do
    local k = string.byte(cipher:sub(i, i))
    if dict[k] then
      entry = dict[k]
    else
      entry = w .. w:sub(1,1)
    end
    dict[size] = w .. entry:sub(1, 1)
    result[#result+1], w, size = entry, entry, size + 1
    if size >= 256 then
      size = 128
      dec_reset(dict, size)
    end
  end
  return table.concat(result)
end

return lzw

test_lzw.lua

local lzw = require 'lzw'

local TOBEmessage = 'TOBEORNOTTOBEORTOBEORNOT'
local LOREMmessage = [=[Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.]=]

local test = {}

test["It encodes TOBEORNOTTOBEORTOBEORNOT"] = function()
  local cipher = lzw.encode(TOBEmessage)
  for i, v in ipairs{84,79,66,69,79,82,78,79,84,256,258,260,265,259,261,263} do
    assert(v == cipher[i])
  end
end

test["It decodes TOBEORNOTTOBEORTOBEORNOT"] = function()
  local message = lzw.decode{84,79,66,69,79,82,78,79,84,256,258,260,265,259,261,263}
  -- print(message)
  assert(message == TOBEmessage)
end

test["It short-encodes lorem-ipsum"] = function()
  local m = LOREMmessage
  local cipher = lzw.short_encode(m)
  assert(cipher:len() <= m:len())
end

test["It short-decodes lorem-ipsum"] = function()
  local m = LOREMmessage
  local cipher = lzw.short_encode(m)
  local decoded = lzw.short_decode(cipher)
  assert(decoded == m)
end

for description, run in pairs(test) do
  if xpcall(run, function(...)
    print("FAILED: ", description)
    for i = 1, select('#', ...) do
      print(select(i, ...))
    end
    print(debug.traceback())
  end) then
    print("Passed: ", description)
  end
end