Using imagesavealpha() and a transparent bg color should do the trick...

Based on dfilkovi s code:

<?php
// Create a new true color image
$im = new imagecreatetruecolor(100, 100);

// Fill with alpha background
$alphabg = imagecolorallocatealpha($im, 0, 0, 0, 127);
imagefill($im, 0, 0, $alphabg);

// Convert to palette-based with no dithering and 255 colors with alpha
imagetruecolortopalette($im, false, 255);
imagesavealpha($im, true);

// Save the image
imagepng($im,  ./paletteimage.png );
imagedestroy($im);
?>

@Sonny

false assumption: PNG of any bit depth can have transparency. It is recorded in the tRNS chunk of the png image (except for truecolor ones) cf format definition

cf www.libpng.org/pub/png/spec/1.2/PNG-Chunks.html#C.tRNS

idem www.w3.org/TR/PNG-Chunks.html#C.tRNS

The difference is how it is recorder: RGBA has a unique record per pixel, with 4 values (3 colors and 1 alpha channel), where "paletted" PNG records alpha channel in its own chunk.

Fireworks is very good at it.

Examples:

http://www.libpng.org/pub/png/pngs-img.html

I think this could help you.

http://roseindia.net/tutorial/php/phpgd/About-transparent.html

<?php
// Create a new true color image
$im = new imagecreatetruecolor(100, 100);

// Convert to palette-based with no dithering and 255 colors
imagetruecolortopalette($im, false, 255);

// Save the image
imagepng($im,  ./paletteimage.png );
imagedestroy($im);
?>

this should make 8bit png

Building on dfilkovi s solution, have you tried using imagesavealpha() to save the full alpha channel information?

I had to add the line imagecolortransparent($im, $alphabg); to the following code (taken from previous answer) for this to work:

// Fill with alpha background
$alphabg = imagecolorallocatealpha($im, 0, 0, 0, 127);
imagecolortransparent($im, $alphabg);
imagefill($im, 0, 0, $alphabg);

// Convert to palette-based with no dithering and 255 colors with alpha
imagetruecolortopalette($im, false, 255);
imagesavealpha($im, true);

// Save the image
imagepng($im,  ./paletteimage.png );
imagedestroy($im);
?>