[plug] compressed, on the fly expandable file system for linux?

[W.Kenworthy]

Is there such a thing as a compressed, on the fly expandable file system
for linux?  I am looking for something I can use for a whole system
backup using dirvish, but I need space efficiency (I.e., a current
tar.bz2 is ~17 G for around 35G of system & data - potentially 30G for a
60G data/system).  How a house with well over a terrabyte of storage has
problems finding a large enough space for a backup is another story!)

Something like a writable, compressed loopback mounted file system that
is on the fly expandable (perhaps sparse?)

I currently use rsync and unison which work ok, but I dont have room for
multiple copies so its time to move to something that will do
incrementals and store it as above.

BillK