Would like to do system backup (but, not enough space)

:confused: I wanted to backup my system I have 228gb on a 654 gb hard drive,but the drive it's going to only has 26.2gb available.
Is my only option external hard drive?
Also once I get it backup will the backup file have my important files such as images, programs, ETC?


Manufacturer Lenovo, Ideapad Y570
Model Lenovo Windows 7 home premium
Service pack 1
Processor Core i7 2630qm CPU @ 2.00GHz
Installed memory (RAM) 8.00GB
System type 64-bit operating system



Thanks
~V