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In cellular networks, it is vital to allocate communication channels efficiently because the bandwidth allocated, for cellular communication is limited. When mobile hosts move from one cell to another cell, to provide uninterrupted service, the new cell should, have enough channels to support the ongoing communication of the mobile hosts that moved, into the cell. If channels are statically allocated, as is the case in current cellular networks, a cell may run out of channels when large number of mobile hosts moves to a cell, thus degrading the quality of service. To overcome this problem, dynamic channel allocation approaches have been proposed. Under dynamic channel allocation, channels are allocated to cells on demand, thus increasing channel utilization and hence improving the quality of service. Such channel allocation approaches fall under two categories, namely, centralized and distributed. Centralized approaches are neither scalable nor reliable, while distributed approaches have the potential to be both reliable and. scalable. In this paper, we present a distributed dynamic channel allocation scheme for cellular networks that is fault tolerant. Our approach can tolerate the failure of mobile nodes as well as static nodes and enhance the quality of service by making efficient reuse of channels.