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This paper presents a new compression method for embedded core-based system-on-a-chip test. In addition to the new compression method, this paper analyzes the three test data compression environment (TDCE) parameters: compression ratio, area overhead, and test application time, and explains the impact of the factors which influence these three parameters. The proposed method is based on a new variable-length input Huffman coding scheme, which proves to be the key element that determines all the factors that influence the TDCE parameters. Extensive experimental comparisons show that, when compared with three previous approaches, which reduce some test data compression environment's parameters at the expense of the others, the proposed method is capable of improving on all the three TDCE parameters simultaneously.