The LZW algorithm has some redundancies for voice traffic. Thus, the V-LZW(Voice LZW) algorithm that decreases the redundancies of the LZW algorithm is suggested for efficent compression of voice. The V-LZW algorithm uses the differential method that reduces the codeword size as well as the length of repeated string. According to the simulation results, it could be seen teat the performance of V-LZW algorithm is better by 35% to 44% in voice compression ratio than that of the conventional modified LZW algorithm. Compared with conventional 32 kbps ADPCM coding with 26 dB SNR, V-LZW has 21 kbps transmission rate, no additional quantization error and simple hardware complexity.