diff --git a/meta-isar/conf/local.conf.sample b/meta-isar/conf/local.conf.sample
index 17455015..ac8b749e 100644
--- a/meta-isar/conf/local.conf.sample
+++ b/meta-isar/conf/local.conf.sample
@@ -149,7 +149,7 @@ CONF_VERSION = "1"
 
 #
 # The default list of extra packages to be installed.
-IMAGE_INSTALL = "hello-isar example-raw example-module-${KERNEL_NAME} enable-fsck isar-exclude-docs samefile hello isar-disable-apt-cache cowsay example-prebuilt"
+IMAGE_INSTALL = "hello-isar example-raw example-module-${KERNEL_NAME} enable-fsck isar-exclude-docs samefile hello isar-disable-apt-cache cowsay example-prebuilt compress-initrd"
 
 #
 # Machines with secure boot should use signed modules.
diff --git a/meta-isar/recipes-initramfs/compress-initrd/compress-initrd.bb b/meta-isar/recipes-initramfs/compress-initrd/compress-initrd.bb
new file mode 100644
index 00000000..b1a5909b
--- /dev/null
+++ b/meta-isar/recipes-initramfs/compress-initrd/compress-initrd.bb
@@ -0,0 +1,21 @@
+# Sample recipe to configure the desired compression tool
+# during initramfs generation
+#
+# This software is a part of ISAR.
+
+DESCRIPTION = "Compress the initrd with configured compression tool"
+MAINTAINER = "Your name here <you@domain.com>"
+
+inherit dpkg-raw
+
+COMPRESS_TOOL ?= "xz"
+
+DEBIAN_DEPENDS = "linux-image-${KERNEL_NAME}, xz-utils, initramfs-tools"
+
+SRC_URI = " \
+    file://postinst \
+"
+do_install() {
+    install -v -d "${D}/etc/initramfs-tools/conf.d/"
+    echo "COMPRESS=${COMPRESS_TOOL}" > "${D}/etc/initramfs-tools/conf.d/${PN}.conf"
+}
diff --git a/meta-isar/recipes-initramfs/compress-initrd/files/postinst b/meta-isar/recipes-initramfs/compress-initrd/files/postinst
new file mode 100644
index 00000000..0db52142
--- /dev/null
+++ b/meta-isar/recipes-initramfs/compress-initrd/files/postinst
@@ -0,0 +1,5 @@
+#!/bin/sh
+
+set -e
+
+update-initramfs -c -k all