Gzip no such file or directory error, still zips files - bash

Question

I'm just learning shell scripting specifically in bash, I want to be able to use gzip to take files from a target directory and send them to a different directory. I enter directories in the command line. ext is for the extensions I want to zip and file will be the new zipped file. My script zips the files correctly, to and from the desired directories, but I get a no such file or directory error. How do I avoid this?
Current code
cd $1
for ext in $*; do
for file in `ls *.$ext`; do
gzip -c $file > $2/$file.gz
done
done
and my I/O
blackton#ltsp-amd64-charlie:~/Desktop/60256$ bash myCompress /home/blackton/Desktop/ /home/blackton/ txt
ls: cannot access *./home/blackton/Desktop/: No such file or directory
ls: cannot access *./home/blackton/: No such file or directory
gzip: alg: No such file or directory
gzip: proj.txt: No such file or directory

Answer 1

There are two separate things causing problems here.
In your outer loop
for ext in $*; do
done
you are looping over all the command line parameters, using each as the extension to search for - including the directory names.
Since the extension is the third parameter, you only want to run the inner loop once on $3:
for file in `ls *.$3`; do
gzip -c $file > $2/$file.gz
done
The next problem is spaces.
You do not want to run ls here - the wildcard expansion will provide the filenames directly, e.g. for file in *.$3, and it will fill $file with a whole filename at a time. The output from ls is split on each space, so you end up with two filenames alg and proj.txt, instead of one alg proj.txt.
That is not enough by itself, though. You also need to quote $file whenever you use it, so the command expands to gzip -c "alg proj.txt" instead of gzip -c alg proj.txt, which tells gzip to compress two files. In general, all variable expansions that you expect to be a filename should be quoted:
cd "$1"
for file in *."$3"; do
gzip -c "$file" > "$2/$file.gz"
done
One further problem is that if there are no files matching the extension, the wildcard will not expand and the command executed will be
gzip -c "*.txt" > "dir/*.txt.gz"
This will create a file that is literally called "*.txt.gz" in the target directory. A simple way to avoid this would be to check that the original file exists first - this will also avoid accidentally trying to gzip an oddly named directory.
cd "$1"
for file in *."$3"; do
if [ -f "$file" ]; then
gzip -c "$file" > "$2/$file.gz"
fi
done

Answer 2

you can try this;
#!/bin/bash
Src=$1
Des=$2
ext="txt"
for file in $Src/*; do
if [ "${file##*.}" = "${ext}" ]; then
base=$(basename $file)
mkdir -p $2 #-p ensures creation if directory does not exist
gzip -c $file > $Des/$base.gz
fi
done