As proved in many studies, LZW algorithm, one of the widely used compression schemes, itself contains some types of redundancy, In this paper, VV-LZW coompression algorithm is presented which encodes variable length source string into variable size codewords and reduces such redundancies that the original LZW scheme has. Experiment shows that this scheme especially has good initial compression efficiency and produces more complex output strings than the original LZW. This scheme is very useful to the data compression with small size, and the applications such as crytography.