I want to create a compressed ISO image file and mount that file to one of the virtual drives and access the content (read-only) without worrying about manual decompression/extraction. For Windows and Linux (Ubuntu) OSes.

Which software tool would be better for this? Thanks.

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For Windows and Linux (Ubuntu) OSes. – harik May 17 '11 at 7:29
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See the edit button? You can always add information to your question later. – slhck May 17 '11 at 7:34
If I remember correctly, there is an option to compress the isos in partimage partimage.org/Main_Page which is pre installed on most linux systems. – Michael K May 17 '11 at 7:45
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On Windows, UltraISO can create proprietary ISZ format images, and Daemon Tools can mount them. (related: How to mount a compressed ISO image?)

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