httpd - operating source html in compressed format

For the sake of storage limitation I was wondering if the webpages stored in my open source router firmware could be individually compressed to reduce demand on flash. So index.html would be stored as index.html.gz or something.

I guess this would means having the httpd process decompressing on-the-fly as it's requested by the browser right?

I read up on mod_deflate but (unless I'm reading this wrong) it does compress on-the-go uncompressed source files. My question instead revolves about reducing source pages storage size so I guess it wouldn't help my situation.

Can anybody shed some light on whether this is possible?

Thanks