The invention belongs to the field of digital communication and digital storage, and discloses a packet Markov superposition coding method by taking a binary BCH code as a component code, and a decoding method. The binary BCH code having the code length of n, the information bit length of k and the error correcting capability of tmin is used as the component code; and a binary information sequence (u)u(/u) having the length of K=kBL is coded into a code (u)c(/u) having the length of N=nB(L+m). The invention further provides a soft iteration decoding method applicable to the packet Markov superposition coding method by taking the binary BCH code as the component code. The soft iteration decoding method comprises the following steps of: generating a turnover pattern according to a tree structure, judging whether a test process is ended or not and whether soft information output is calculated or not by using the lower bound of the unreliability of a potential legal error pattern, etc. According to the packet Markov superposition coding method and the decoding method thereof provided by the invention, the value of the coding memory length m is {1,2,3}; the net coding gain, which is greater than 10 dB, is provided at the bit error rate performance, which is as low as 10-10 to 10-15; and thus, the packet Markov superposition coding method and the decoding method thereof provided by the invention can be applied to a communication system having low bit error rate requirements, such as optical fibre communication.