With the advancement in geospatial data acquisition technology, large sizes of digital data are being collected for our world. These include air- and space-borne imagery, LiDAR data, sonar data, terrestrial laser-scanning data, etc. LiDAR sensors generate huge datasets of point of multiple returns. Because of its large size, LiDAR data has costly storage and computational requirements. In this article, a LiDAR compression method based on spatial clustering and optimal filtering is presented. The method consists of classification and spatial clustering of the study area image and creation of the optimal planes in the LiDAR dataset through first-order plane-fitting. First-order plane-fitting is equivalent to the Eigen value problem of the covariance matrix. The Eigen value of the covariance matrix represents the spatial variation along the direction of the corresponding eigenvector. The eigenvector of the minimum Eigen value is the estimated normal vector of the surface formed by the LiDAR point and its neighbors. The ratio of the minimum Eigen value and the sum of the Eigen values approximates the change of local curvature, which determines the deviation of the surface formed by a LiDAR point and its neighbors from the tangential plane formed at that neighborhood. If the minimum Eigen value is close to zero for example, then the surface consisting of the point and its neighbors is a plane. The objective of this ongoing research work is basically to develop a LiDAR compression method that can be used in the future at the data acquisition phase to help remove fake returns and redundant points.