How do i compress the the calipor piston on the rear breaks, is there a special too?

Yes you do need a tool Solution #1 is totaly wrong you will not do it like this!!!!!! So don't waste your time trying.
If you are lucky you can sometimes use an allen key to turn the piston but you need to compress it at the same time that you turn it, its difficult but not impossible.

Release handbrake
Remove cir-clip holding hand-brake cable.
Unhook hand-brake cable end from bracket.
Remove top bolt on rear of calliper
Swing calliper down (towards the rear)
Clamp brake pipe tight.
Pop out old brake pads
Fit blead tube to blead nipple
Release blead nipple
Push in and rotate piston on calliper to retract it (use jaguar special tool if possible)
Important!!!!
Left side retracts anti-clockwise
Right side retracts clockwise
Align notch on piston with mark on calliper body.
Tighten Blead Nipple
Remove blead tube and clamp
Fit new pads.
Swing calliper back in place.
Re-install bolt on rear of calliper.
Re-attach hand-brake cable.
Re-install cir-clip on hand-brake cable.
I hope to have pictures of this process available on http://www.bluejag.co.uk shortly.

Yes, you can rent one from Auto Zone, Advanced Auto Parts, etc.

Yes. one large C-Clamp.
Take the old pads and place on the piston and compress with a C-Clamp or put the caliper on without the pads - stick two big screw-drivers into the side of caliper and push the piston back in slowly as to not put too much pressure to break the piston edge or the caliper edge.  Remove the filler cap off of the brake-fluid reservoir before doing this and be careful as brake fluid will eat through the paint on your car.
Keep hands, grease and oil off all brake components including the rotors - new rotors must have the special coating removed with Brake-Cleaner (or gas) or you'll ruin your pads immediately.

The area that the caliper slides on (is a bracket) has rails and these get grooves into them which causes problems.  File it smooth and put special high-temp grease on these and over the bleeder screw so rust doesn't get at it for easier future servicing.
Always bleed the system after servicing.  Pump brakes before moving car after servicing.
The pins of the calipers which allow it to move freely must be removed and freed up and coated with the brake grease so the caliper will move freely.
Canada Rocks!
Good luck.
:)