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A crucial challenge in the implementation of a cooperative diversity protocol is how to assign source-relay pairs. In this paper, we address this problem under the knowledge of the users' spatial distribution and we propose a distributed relay-assignment algorithm for cooperative communications. In the proposed algorithm, the relay is chosen to be the nearestneighbor to the user towards the base-station (access-point). An outage analysis for the proposed scheme is provided under a random spatial distribution for the users, and an approximate expression for the outage probability is derived. Simulation results for indoor wireless local area networks (WLAN) are provided. By utilizing the proposed protocol, simulation results indicate a significant gain in coverage area over the direct transmission scheme under fairly the same bandwidth efficiency and fixed average transmitted power. A 350% increase in the coverage area can be achieved by the distributed Nearest-neighbor protocols. This coverage increase can also be translated to energy efficiency over direct transmission when fixing the total coverage area.