In many services and applications the payload of the IP packet is almost of the same size or even smaller than the header. Over the end-to-end connection, comprised of multiple hops, these protocol headers are extremely important but over just one link (hop-to-hop) these headers serve no useful purpose. It is necessary to compress those headers, to save the bandwidth and use the expensive resources efficiently. To address this, we present an IP Header Compression (IPHC) technique for header compression. IEEE 802.11 (WLAN) is a technology that will play an important role in the next generations of wireless networks. WLAN technology doesnt support header compression techniques as part of the Medium Access Control layer at the moment. Header compression techniques such as IP Header Compression (IPHC) can be used to reduce the overhead of the IP-based traffic. The proposed system describes implementation of IPv4 and TCP header compression using IPHC as part of IEEE 802.11 MAC layer.