see the cloop readme
http://www.knopper.net/download/knoppix/cloop.README

you will have to compile that module for your running kernel. ( doesn't require a kernel recompile if you have the sources )

Mounting a compressed image (see above for device creation):
insmod cloop.o file=/path/to/compressed/image
mount -o ro -t whatever /dev/cloop /mnt/compressed