The archivers with the highest compression ratio would be KGB (which has been used to compress a 430 MB MS Office ISO image to fit on a floppy disk) and Uharc (a high compression multimedia archiver), but they're not necessarily the fastest. The compression will be lossless.
If you want to reduce the size via the bitrate (and thus the quality), I recommend this program:
MP3 Quality Modifier makes it really easy to change the bitrate of your MP3 music collection so that the filesize can be dramatically reduced. With this advantage it's possible to put more music on your MP3-player or just to save some disk space.
Even advanced tasks are possible: Downsampling, changing the used channels and so on. With the included presets it's simpler than ever before to manage all those settings.
Best of all is that - unlike other software - the ID3 tags (title, album pictures, etc.) will be completely retained without any effort!
* Change MP3 quality with just a few clicks.
* Really easy and intuitive interface.
* Retain all ID3 tags with ease.
* Advanced options: detailed bitrate settings, sample frequency, etc.
* Quality comparison: compare created files with original ones.
* Multilingual: English, French, German, Italian, Portuguese, Spanish.
* Portable: extremely small, just one executable, no installation.
* Free of charge!
All programs are freeware and portable.
And if you want to learn more about audio ripping and MP3, here's a very comprehensive tutorial:
Radified Guide to Ripping CD audio & MP3 Encoding