FPGAs with built-in decompression controller circuits can use compressed configuration data. However, please note that even FPGAs that support the Decompression function may not support it depending on the configuration mode.
 
There are two ways to create compressed configuration data in Quartus II: setting and creating before compilation and creating after compilation. Generate a programming file by one of the operations.

The operating procedure is as follows.

Settings before compilation

1. Click the Assignments menu ⇒ Device ⇒ Device & Pin Options button.
2. Select Configuration tab.
3. Check the "Generate compressed bitstreams" option.
4. If you need a programming file format other than POF, select the desired format from the Programming Files tab.
5. Click the OK button.

Then compile. After compilation is complete, a compressed programming file is generated.
 
Post-compilation settings

1. Select File menu ⇒ Convert Programming Files.
2. Select the desired format from Programming file type.
3. If you are using an Altera configuration device, select the device type from Configuration device.
4. Select the configuration transfer mode from Mode.
5. Select SOF Data in Input files to convert, click the Add File button and select the SOF file for the target FPGA device.
6. Select the added SOF file name and click the Properties button.
7. Check the "Compression" option.
8. Click the Generate button.

A file creation complete message is displayed and a compressed programming file is generated.


Enhanced configuration devices (EPC4, EPC8, EPC16) also support the Decompression feature.
It can be used when using FPGA devices that do not have a built-in decompression controller circuit, such as Stratix devices.
When using Stratix II (Stratix III and Stratix IV do not support Enhanced configuration devices) or Cyclone series, it is recommended to use the Decompression function on the FPGA side.

The Quartus II operation to create compressed data for Enhanced configuration devices is as follows:

Settings before compilation

1. Click the Assignments menu ⇒ Device ⇒ Device & Pin Options button.
2. Select Configuration tab.
3. Select Enhanced configuration device from Use configuration device.
4. Click the Configuration Device Options button.
5. Check the "Compression mode" option in the Options tab.
6. Click the OK button on all screens to complete the settings.

Then compile. After compilation is complete, a compressed programming file (*.pof) is generated.

Post-compilation settings

1. Select File menu ⇒ Convert Programming Files.
2. Select "Programmer Object File (.pof)" from Programming file type.
3. Select Enhanced configuration device model from Configuration device.
4. Check the "Compression mode" option from the Options button.
5. Select the configuration transfer mode from Mode.
6. Select SOF Data in Input files to convert, click the Add File button, and select the file for the target FPGA device.
7. Select SOF file.
8. Click the Generate button.

A file creation completion message is displayed and a compressed programming file (*.pof) is generated.

Please refer to the following documents for these contents.
Document: Quartus II Getting Started Guide - How to Set Device & Pin Options