I think that is possible to use the gzip algorithm. This is the compression algorithm used in HTTP protocol. Apache can server compresed pages an the browser can decompress it al display as a normal page.
AFAIK there is no compression-method for SOAP specified
 
I would appreciate some infos about a compression-standard that could be implemented on the application level.
All those perform a pattern-compression (i.e. LZW,ZIP) on the XML-file and take special care about the
XML-syntax, which means it can yield a better compression.

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