With the recent growth and development of the Internet and companies intranets, it has become important to look for ways of developing these network, by developing new applications or protocols to the network reference models. Some protocols, such as TCP/IP (Transmission Control Protocol / Internet Protocol), are vendor–neutral. Others, such as Novell IPX/SPX (Internetwork Packet Exchange / Sequenced Packet Exchange) and Apple Delivery Datagram Protocol (DDP), are tied to specific vendors. In this thesis, the proposed application is a text file transfer service that operates on a LAN (Local Area Network) and over TCP/IP networks. The proposed application is basically a client/server protocol in which a system running the server accepts commands from a system running a client. The service allows users to send commands to the server for uploading and downloading files. The application uses the RSA encryption system to provide good security for data and LZW (Lempel Ziv Welch) compression method to reduce the transfer time, which is considered level one of security. The proposed research study the TCP/IP protocols and improve a way of inserting new application (protocol) for the TCP/IP reference model by using the socket API (Application Programming Interface). The project adds a text file transfer protocol to the TCP/IP. The system is build by using Jbuilder version 4 programming language, and it is implemented in Window XP operating system environment on PCs linked by LAN as a star topology.