Extensive research has been conducted on labelling schemes, however, most of proposed labelling schemes are costly due to the need of re-calculating or re-labelling existing nodes whenever XML documents being updated. In our view, an effective labelling scheme needs to be (i) Compact, total lengths of labels are as small as possible. (ii) Dynamic, being able to update XML data dynamically without re-labelling or recalculating value of existing nodes. (iii) Last but not least, facilitating the identification of various relationships between nodes. In this paper, we develop a labelling scheme, the Compressed Dynamic Labelling scheme which meets the above requirements. Furthermore, with our compressed labelling scheme, total lengths of labels are reduced significantly comparing with some existing labelling schemes. Our experimental works have shown advantages of the proposed scheme.