Image resizing

WordPress.com has a neat feature that it can resize images on fly by adding width / height parameters to URL. For example:

http://twentyfourteendemo.files.wordpress.com/2012/02/lighthousemorning.jpg?w=672&h=372&crop=1

http://twentyfourteendemo.files.wordpress.com/2012/02/lighthousemorning.jpg?w=172&h=372&crop=1

Is there a way to do this thing on a self hosted WP installation?

I know it’s possible to auto-generate images of different sizes after upload, but this just takes up space and is not that practical.
Sure, there is CSS and all that, but this is cool because it downsizes the image if needed.