Collaborative learning is an online classroom can take the form of conversation between the whole classes or within smaller groups. Moodle (Modular ObjectOriented Dynamic Learning Environment) is a free and open source e-learning software platform, also known as a Learning Management System, or Virtual Learning Environment (VLE). As a web-based tool, Moodle offers the possible way to deliver courses which include an enormous variety of information sources -links to multimedia, websites and image -which are hard to deliver in a traditional teaching atmosphere. The converse (chat) activity module in moodle allows participants to encompass a realtime synchronous discussion in a moodle course. A teacher can organize users into groups within the course or within particular activities. This paper aims in efficient group formation of learners in a collaborative learning environment so that every individual in the group is benefitted. As a testing platform tenth standard Tamil text book is incorporated in to moodle. In this paper K-NN clustering algorithm is used to improve the group performance. This algorithm achieves good performance in terms of balancing the knowledge level among all the students..
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