The invention discloses high-compaction iron phosphate and a preparation method of high-compaction lithium iron phosphate. Firstly, ferric hydroxide colloid is prepared; subsequently, the ferric hydroxide colloid is used as a matrix, phosphoric acid and ammonium bicarbonate are added at high temperature, and iron phosphate with smaller primary particles is obtained; meanwhile, a process of removing crystal water from the obtained ferric phosphate dihydrate is carried out; spray drying after slurrying is performed by adopting a glucose solution, and calcining is performed to obtain iron phosphate. The method comprises the following steps: taking high-compaction iron phosphate as a raw material, grinding slurry by adopting a composite carbon source, carrying out spray drying and primary sintering, adding a dispersing agent (polyethylene glycol solution), carrying out spray drying, coating the surface of lithium iron phosphate with the dispersing agent, and sintering at a higher temperature for a shorter time, thereby obtaining the high-compaction lithium iron phosphate. The obtained high-compaction lithium iron phosphate is small in primary particle size, large in BET, less in particle adhesion and easy to grind, and the prepared high-compaction lithium iron phosphate is high in compaction density, small in primary particle size and good in capacity and cycle performance.