A decoder for data encoded in a form combining a prefix which is a previously coded sub-string and a next data element in the data stream. The decoder includes memories for storing code words and data separately. Upon receipt of a code word the decoder stores the previously received code word, applies the newly received word to the code word memory to obtain the location of the last data element which is part of the data represented by the newly received code word, and another code word associated with the prefix. Upon completion of decoding the latest code word, the first data element of the decoded word is appended to the next previously received code word, and the combination is stored as the equivalent of a code word which is next after the highest code word already received. At least one memory is shared for use during encoding and decoding.