If you want to be able to directly use bzip2 files with tar, you can use the tar patch available from the LFS FTP site. This patch will add the -y option to tar which works the same as the -z option to tar (which can be used for gzip files).
Apply the patch by running the following command:
cd src &&
patch -i ../../gnutarpatch.txt &&
Install Tar by running the following commands from the toplevel directory:
./configure --prefix=/usr --libexecdir=/usr/bin \
The tar package contains the tar and rmt programs.