how can I shrink down the size of an .avi or .mpg file?

[diablosmatrix]

I have an mpeg-2 file thats about 1h20mins long. The filesize is 850mb. Is there a program I can use to maybe shrink it to 700mb or less with too much quality loss?

When I converted it to an .avi, the file became about 1.4gb. I used MGI videowave 4 to convert it though, since I already had that and it seems to work.