diff --git a/create b/create
index 67a91fb..4118f2d 100755
--- a/create
+++ b/create
@@ -25,7 +25,30 @@ debug set -x
 
 case "$IMAGE_TYPE" in
   tarball)
-    IMG_EXT=".tar.gz"
+    case $TARBALL_COMPRESS in
+        none)
+          IMG_EXT=".tar"
+          ;;
+        gzip|pigz)
+          IMG_EXT=".tar.gz"
+          ;;
+        bzip2|pbzip2|lbzip2)
+          IMG_EXT=".tar.bz2"
+          ;;
+        lzop)
+          IMG_EXT=".tar.lzo"
+          ;;
+        xz)
+          IMG_EXT=".tar.xz"
+          ;;
+        p7zip)
+          IMG_EXT=".tar.7z"
+          ;;
+        *)
+          log_error "$TARBALL_COMPRESS as tarball compressor is not supported"
+          exit 1
+          ;;
+    esac
     ;;
   qemu)
     IMG_EXT=".img"
@@ -134,7 +157,7 @@ if [ "$CDINSTALL" = "no" ] ; then
 
     if [ "${IMAGE_TYPE}" = "tarball" ] ; then
         # unpack image
-        tar pzxf $IMAGE_FILE -C $TARGET
+        tar -I"$TARBALL_COMPRESS" -pxf $IMAGE_FILE -C $TARGET
     elif [ "${IMAGE_TYPE}" = "dump" ] ; then
         root_dump="${IMAGE_FILE}"
         ( cd ${TARGET}; restore -r -y -f ${root_dump} > /dev/null )
diff --git a/defaults b/defaults
index 52bbd46..ecdc6cd 100644
--- a/defaults
+++ b/defaults
@@ -40,6 +40,13 @@
 # ( default is @localstatedir@/cache/ganeti-instance-image )
 # IMAGE_DIR=""
 
+# TARBALL_COMPRESS: compress program use to compress tar file.
+# It must accept the -d option, for decompression.
+# The argument can contain command line options.
+# Use either none, gzip, pigz, bzip2, pzip2, lbzip2, lzop, xz, p7zip
+# (default is gzip)
+# TARBALL_COMPRESS="gzip"
+
 # NOMOUNT: Do not try to mount volume (if it is not a linux partition). Accepts
 # either 'yes' or 'no'. This option is useful for installing Windows images for
 # example. ( default is no )