How to read bits from a file?

Python can only read a byte at a time. You'd need to read in a full byte, then just extract the value you want from that byte, e.g.

b = x.read(1)
firstfivebits = b >> 3

Or if you wanted the 5 least significant bits, rather than the 5 most significant bits:

b = x.read(1)
lastfivebits = b & 0b11111

Some other useful bit manipulation info can be found here: http://wiki.python.org/moin/BitManipulation

As the accepted answer states, standard Python I/O can only read and write whole byte(s) at a time. However you can simulate such a stream of bits using this recipe for Bitwise I/O.

Updates

After modifying the Rosetta Code's Python version to work in unchanged in both Python 2 & 3, I incorporated those changes into this answer.

In addition to that, later, after being inspired by a comment made by @mhernandez, I further modified the Rosetta Code so it supports what's called the context manager protocol which allows instances of both of its two classes to be used in Python with statements. Latest version is shown below:

class BitWriter(object):
    def __init__(self, f):
        self.accumulator = 0
        self.bcount = 0
        self.out = f

    def __enter__(self):
        return self

    def __exit__(self, exc_type, exc_val, exc_tb):
        self.flush()

    def __del__(self):
        try:
            self.flush()
        except ValueError:   # I/O operation on closed file.
            pass

    def _writebit(self, bit):
        if self.bcount == 8:
            self.flush()
        if bit > 0:
            self.accumulator |= 1 << 7-self.bcount
        self.bcount += 1

    def writebits(self, bits, n):
        while n > 0:
            self._writebit(bits & 1 << n-1)
            n -= 1

    def flush(self):
        self.out.write(bytearray([self.accumulator]))
        self.accumulator = 0
        self.bcount = 0


class BitReader(object):
    def __init__(self, f):
        self.input = f
        self.accumulator = 0
        self.bcount = 0
        self.read = 0

    def __enter__(self):
        return self

    def __exit__(self, exc_type, exc_val, exc_tb):
        pass

    def _readbit(self):
        if not self.bcount:
            a = self.input.read(1)
            if a:
                self.accumulator = ord(a)
            self.bcount = 8
            self.read = len(a)
        rv = (self.accumulator & (1 << self.bcount-1)) >> self.bcount-1
        self.bcount -= 1
        return rv

    def readbits(self, n):
        v = 0
        while n > 0:
            v = (v << 1) | self._readbit()
            n -= 1
        return v

if __name__ == '__main__':
    import os
    import sys
    # Determine this module's name from it's file name and import it.
    module_name = os.path.splitext(os.path.basename(__file__))[0]
    bitio = __import__(module_name)

    with open('bitio_test.dat', 'wb') as outfile:
        with bitio.BitWriter(outfile) as writer:
            chars = '12345abcde'
            for ch in chars:
                writer.writebits(ord(ch), 7)

    with open('bitio_test.dat', 'rb') as infile:
        with bitio.BitReader(infile) as reader:
            chars = []
            while True:
                x = reader.readbits(7)
                if not reader.read:  # End-of-file?
                    break
                chars.append(chr(x))
            print(''.join(chars))

Another usage example showing how to "crunch" an 8-bit byte ASCII stream discarding the most significant "unused" bit...and read it back (however neither use it as a context manger).

import sys
import bitio

o = bitio.BitWriter(sys.stdout)
c = sys.stdin.read(1)
while len(c) > 0:
    o.writebits(ord(c), 7)
    c = sys.stdin.read(1)
o.flush()

...and to "decrunch" the same stream:

import sys
import bitio

r = bitio.BitReader(sys.stdin)
while True:
    x = r.readbits(7)
    if not r.read:  # nothing read
        break
    sys.stdout.write(chr(x))