Asychronous transfer mode (ATM) networks are high-speed networks with guaranteed quality of service. The main cause of congestion in ATM networks is over utilization of physical bandwidth. Unlike constant bit-rate (CBR) tra$c, the bandwidth reserved by variable bit-rate (VBR) tra$c is not fully utilized at all instances. Hence, this unused bandwidth is allocated to available bit-rate (ABR) tra$c. As the bandwidth used by VBR tra$c changes, available bandwidth for ABR tra$c varies; i.e., available bandwidth for ABR tra$c is inversely proportional to the bandwidth used by the VBR tra$c. Based on this fact, a rate-based congestion control algorithm, Explicit Allowed Rate Algorithm (EARA), is presented in this paper. EARA is compared with Proportional Rate Control Algorithm (PRCA) and Explicit Rate Indication Congestion Avoidance Algorithm (ERICA), in both LAN and WAN environments. Simulation of all three algorithms are conducted under both congestion and fairness con"gurations with simultaneous generation of CBR, rt-VBR, nrt-VBR and ABR tra$c. The results show that, with very small over-head on the switch, EARA signi"cantly decreases the required bu!er space and improves the network throughput.