After previously open-sourcing the VP8 video codec
and coming up with a new container format (WebM), Google set its sights on making a new image format. Google has now publicly announced and released the initial code to the WebP image format. The goal of WebP is to better compress images than PNG and JPEG files commonly used on web-sites while retaining the same image quality.
According to Google's tests, WebP can result in around a ~39 percent reduction in file-size compared to the image formats commonly used for the web today. Below is the description from the WebP project page
WebP is a method of lossy compression that can be used on photographic images. The degree of compression is adjustable so a user can choose the trade-off between file size and image quality.
A WebP file consists of VP8 image data, and a container based on RIFF. Webmasters, web developers and browser developers can use the WebP format to create smaller, better looking images that can help make the web faster.
There is also a blog post
about it via the Google Chrome/Chromium developers. These developers are working on adding WebP support to WebKit and then pulling that into a future release of the Google web-browser.