Abstract: In accordance with the present invention, local loop testing in an echo canceller based modem is provided in a manner in which proper operation of both the receiver and echo canceller can be assessed simultaneously. Specifically, the modem includes means for generating data and interfering symbol sequences and for applying the interfering sequence to both the echo canceller and the modem transmitter, while applying the data sequence only to either the transmitter or the echo canceller. During closed loop testing, the modem connection to the transmission line is opened, and a portion of the output of the modem transmitter is applied to the modem receiver via a leakage path through the hybrid. The received symbol is subtracted from the echo canceller output, resulting in application to the receiver of only a version of the data symbol sequence. Advanced knowledge of the characteristics of the data symbol sequence allows proper receiver operation to be verified.