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Critical re-examination of the premises of conventional systems for continuous speech recognition has led to a study of human processes of speech perception. It was found that deletion of a syllable is often not noticed by a listenter, suggesting that the basic unit of continuous speech perception is larger than the syllable. Further experiments are described and discussed on the size of actual units of perception, effects of syntactic roles, unit, organization and access to the mental lexicon, effects of context, as well as effects of repeated listening. A system for automatic recognition of continuous speech is then proposed on the basis of these results and considerations, utilizing both words and syllables as units of recognition, and using both local and global coherence in reducing word candidates as well as modifying or renewing word and syllable templates.