diff --git a/slixmpp/plugins/xep_0138.py b/slixmpp/plugins/xep_0138.py
index b7039f7b..d5b04b4b 100644
--- a/slixmpp/plugins/xep_0138.py
+++ b/slixmpp/plugins/xep_0138.py
@@ -1,21 +1,14 @@
-
-# slixmpp: The Slick XMPP Library
-# Copyright (C) 2011  Nathanael C. Fritz
-# This file is part of slixmpp.
-# See the file LICENSE for copying permission.
 import logging
 import zlib
 
-
 from slixmpp.stanza import StreamFeatures
-from slixmpp.xmlstream import RestartStream, register_stanza_plugin, ElementBase, StanzaBase
+from slixmpp.xmlstream import register_stanza_plugin, ElementBase, StanzaBase, tostring
 from slixmpp.xmlstream.matcher import *
 from slixmpp.xmlstream.handler import *
 from slixmpp.plugins import BasePlugin, register_plugin
 
 log = logging.getLogger(__name__)
 
-
 class Compression(ElementBase):
     name = 'compression'
     namespace = 'http://jabber.org/features/compress'
@@ -44,6 +37,8 @@ def setup(self, xml):
         StanzaBase.setup(self, xml)
         self.xml.tag = self.tag_name()
 
+    def set_method(self, method):
+        self._set_sub_text('{}method', text=method)
 
 class Compressed(StanzaBase):
     name = 'compressed'
@@ -56,35 +51,19 @@ def setup(self, xml):
         StanzaBase.setup(self, xml)
         self.xml.tag = self.tag_name()
 
+class CompressFailure(StanzaBase):
+    name = 'failure'
+    namespace = 'http://jabber.org/protocol/compress'
+    conditions = {'setup-failed', 'unsupported-method'}
 
+    def setup(self, xml):
+        StanzaBase.setup(self, xml)
+        self.xml.tag = self.tag_name()
 
-
-class ZlibSocket(object):
-
-    def __init__(self, socketobj):
-        self.__socket = socketobj
-        self.compressor = zlib.compressobj()
-        self.decompressor = zlib.decompressobj(zlib.MAX_WBITS)
-
-    def __getattr__(self, name):
-        return getattr(self.__socket, name)
-
-    def send(self, data):
-        sentlen = len(data)
-        data = self.compressor.compress(data)
-        data += self.compressor.flush(zlib.Z_SYNC_FLUSH)
-        log.debug(b'>>> (compressed)' + (data.encode("hex")))
-        #return self.__socket.send(data)
-        sentactuallen = self.__socket.send(data)
-        assert(sentactuallen == len(data))
-
-        return sentlen
-
-    def recv(self, *args, **kwargs):
-        data = self.__socket.recv(*args, **kwargs)
-        log.debug(b'<<< (compressed)' + data.encode("hex"))
-        return self.decompressor.decompress(self.decompressor.unconsumed_tail + data)
-
+    def get_condition(self):
+        """Return the condition element's name."""
+        for child in self.xml:
+            return child.tag.split('}', 1)[-1]
 
 class XEP_0138(BasePlugin):
     """
@@ -101,6 +80,7 @@ def plugin_init(self):
         self.compression_methods = {'zlib': True}
 
         register_stanza_plugin(StreamFeatures, Compression)
+        self.xmpp.register_stanza(CompressFailure)
         self.xmpp.register_stanza(Compress)
         self.xmpp.register_stanza(Compressed)
 
@@ -110,11 +90,25 @@ def plugin_init(self):
                     self._handle_compressed,
                     instream=True))
 
+        self.xmpp.register_handler(
+                Callback('CompressFailure',
+                    StanzaPath('failure'),
+                    self._handle_failure,
+                    instream=True))
+
         self.xmpp.register_feature('compression',
                 self._handle_compression,
                 restart=True,
                 order=self.config.get('order', 5))
 
+        self.stats = {
+            'rx-compress': 0,
+            'tx-compress': 0,
+            'rx-real': 0,
+            'tx-real': 0,
+        }
+        self.xmpp.add_event_handler('disconnected', lambda _: log.debug("Compression stats %r" % self.stats))
+
     def register_compression_method(self, name, handler):
         self.compression_methods[name] = handler
 
@@ -123,20 +117,47 @@ def _handle_compression(self, features):
             if method in self.compression_methods:
                 log.info('Attempting to use %s compression' % method)
                 c = Compress(self.xmpp)
-                c['method'] = method
-                c.send(now=True)
+                c.set_method(method)
+                str_data = tostring(c.xml, stream=self.xmpp, top_level=True)
+                self.xmpp.send(c)
+
                 return True
         return False
 
+    def _decorate_transport(self, transport):
+        compressor = zlib.compressobj()
+        decompressor = zlib.decompressobj(zlib.MAX_WBITS)
+
+        orig_recv = self.xmpp.data_received
+        def zlib_recv(data):
+            #log.debug('zlib: received %s' % data)
+            plain = decompressor.decompress(decompressor.unconsumed_tail + data)
+            log.debug("zlib: decompressed %d bytes into %d" % (len(data), len(plain)))
+            self.stats['rx-compress'] += len(data)
+            self.stats['rx-real'] += len(plain)
+            orig_recv(plain)
+        self.xmpp.data_received = zlib_recv
+
+        orig_write = transport.write
+        def zlib_write(data):
+            compressed = compressor.compress(data) + compressor.flush(zlib.Z_SYNC_FLUSH)
+            log.debug("zlib: compressed %d bytes into %d" % (len(data), len(compressed)))
+            #log.debug('zlib: sent %s' % compressed)
+            self.stats['tx-compress'] += len(compressed)
+            self.stats['tx-real'] += len(data)
+            return orig_write(compressed)
+        transport.write = zlib_write
+
+        return transport
+
     def _handle_compressed(self, stanza):
         self.xmpp.features.add('compression')
         log.debug('Stream Compressed!')
-        compressed_socket = ZlibSocket(self.xmpp.socket)
-        self.xmpp.set_socket(compressed_socket)
-        raise RestartStream()
+        self.xmpp.connection_made(self._decorate_transport(self.xmpp.transport))
 
     def _handle_failure(self, stanza):
-        pass
+        # TODO - feature processing needs a restart
+        print("failure %s" % stanza.get_condition())
 
 xep_0138 = XEP_0138
 register_plugin(XEP_0138)