Multi-label submodular Markov Random Fields (MRFs) have been shown to be solvable using max-flow based on an encoding of the labels proposed by Ishikawa, in which each variable X-i is represented by l nodes (where l is the number of labels) arranged in a column. However, this method in general requires 2l(2) edges for each pair of neighbouring variables. This makes it inapplicable to realistic problems with many variables and labels, due to excessive memory requirement. In this paper, we introduce a variant of the max-flow algorithm that requires much less storage. Consequently, our algorithm makes it possible to optimally solve multi-label submodular problems involving large numbers of variables and labels on a standard computer.