I had a 4kb image in my pc which was completely black with some transparency (alpha channel). When I imported it to AGS those 4kb turned into 1000kb. This is really frustrating. Is there any way to solve this?
I'm frighting my game size is getting really big for this reason.
By default, sprites are stored uncompressed in an AGS game, so it doesn't matter which way of compression the original image file uses.
Try to turn on the 'compress sprites' option (in the General settings I think) and see if that helps. This only uses a RLE scheme which is obviously not as good as PNGs or GIF, but would be performance-friendly and should still do a good work if there're lots of solid colour areas in the sprites.
Also keep in mind that AGS games usually compress quite well to .rar or .zip format.
GG is right... a 150 MB game can easily be zipped to about 20 MB.