WebP is a lossy compression method proposed by Google. The degree of compression is adjustable so a user can choose between file size and image quality. WebP typically achieves an average of 39% more compression than JPEG without loss of image quality.
You can check gallery that compares JPEG and WEBP (The WebP images are more than 30% smaller than the JPEG ones): http://code.google.com/speed/webp/gallery.html. The only problem with this method is bad browser support. At this time it’s just Google Chrome 9+ and Opera 11.10 beta.
Find more information about WebP: http://code.google.com/speed/webp/