Abstract: A method and apparatus for updating a congestion window in a packet switched network is disclosed. A transmitting terminal first determines whether a receiving terminal is capable of computing packet throughput rates and then selects whether to operate at a constant or a variable transmission rate. If a variable transmission rate, the receiving terminal computes the effective rate and transmits that rate information to the transmitting terminal. The system then adjusts the throughput rate and simultaneously adjusts the congestion window according to the fed back information. If the receiving terminal is not able to calculate a throughput rate, the sending terminal performs such a calculation based upon messages that acknowledge receipt of the transmitted packets.