Markus Kuhn has this to say about it: I wrote the freely available JBIG-KIT 1.2 portable ANSI C library, which implements a highly effective lossless bi-level image compression algorithm based on context sensitive arithmetic coding. The JBIG algorithm (specified in ITU-T Recommendation T.82), which is implemented in this library, is especially suitable for compressing scanned documents and fax pages. You can also download the (unfortunately German) project report (Studienarbeit) that I wrote about JBIG-KIT (abstract).

Release 1.6 available as of 6/2004.

http://www.cl.cam.ac.uk/~mgk25/jbigkit/