Method for efficient image distribution and management Invention employs compact image data structures and packet delivery techniques for Internet applications. Images on a Web page are inefficiently stored, using a single image per file. Invention uses clustering to merge similar images into a single file in order to exploit the redundancy between images. A 30-50% image data size reduction is achieved by eliminating the redundancies of color indexes. A metadata file permits an easy extraction of images. Present invention permits a more efficient use of the cache, since a shorter list of cache references is required. Packet and transmission delays are reduced by 50% eliminating redundant TCP/IP headers and connection time. Present invention eliminates redundancy and provides valuable benefits for optimizing packet delivery in IP networks by reducing latency and minimizing the bandwidth requirements.