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Emerging IEEE 802.11 standards provide very high raw bandwidth. However, the overheads introduced by the physical and MAC layers are also increasingly substantial. Moreover, the multi-rate capability provided by the various physical layers requires that the MAC layer adapts the transmission rate according to the channel conditions. Recently, several rate-adaptation algorithms have been proposed. However, all the schemes have considered the rate adaptation for the Data frame only, while assuming that the control frames are always transmitted at a low basic rate. Also, the rate adaptation function is performed either at the sender side or at the receiver side. A new rate-adaptation algorithm called the full auto rate (FAR) algorithm is proposed, which is able to adapt the transmission rate of all the frames (both control and Data). The FAR algorithm combines the sender- and receiver-based methods proposed in the literature, that is, the rate adaptation of the RTS/CTS frames is done at the sending side of these frames while that for the Data/ACK frames is done at the receiving side of the frames. Moreover, in order to cope with the issues involved in virtual carrier sensing (VCS), the authors have proposed a modified virtual carrier sensing (MVCS) mechanism. Both analytical and simulation results show that the FAR algorithm greatly improves the performance of IEEE 802.11.