Question: Can search engines read the compressed URLS from sites such as BIT.LY and would these been deemed inbound links for SEO?
What are URLs Shortening sites and why use them?
The URL shortening sites enable to people to take long URLS and make them shorter. People use such services for Twitter and for putting URLs in emails.
Search Engine Land has documented all the URL shortening services and the pros and cons.
How does Bit.ly and other URL shortener sites work?
The market leading sites take the long URL and create a 301 redirect to the original page. Search engines will be able to index and follow these links.
What the benefit of Inbound Links from sites such as Twitter
For search engine optimisation you should consider including in your strategy tweets that contain key phrases and a link back to relevant content around those key phrases. You should be doing tweets which will stimulate conversation, information for your followers and those which are for SEO purposes.
Getting these tweets RT is key as well – as Google’s Circle of influence is getting more influential in rankings, so the more RT you can get on keyword rich tweets the more impact it will have from an inbound link aspect.