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In case of sensor network, hierarchical routing has received a great magnitude of interest than flat routing for achieving energy efficiency. While the overhead of creating hierarchical control structure, should be kept reasonably low. Directed diffusion (DD) is one of the most prominent and widely accepted example of hierarchical data centric routing. Directed diffusion suffers from huge flooding problem and further improved using passive clustering to reduce flooding for interest propagation. Passive clustering technique is not energy efficient as it does not consider residual energy of nodes. Also it does not have any parameter to restrict the number of clusterheads and gateways. To achieve energy efficiency and prolonged network lifetime we introduce residual energy and distance based cluster creation. Energy conserving passive clustering technique will select better nodes as clusterhead and gateway in terms of residual energy and distance which will in turn reduce the overlapping region and number of gateway to conserve energy. At the same time we have applied periodic sleep and awake among cluster members to achieve prolonged lifetime. Our proposed algorithm will add some extra overhead for cluster creation and maintenance in compare to passive clustering but will perform better in terms of energy dissipation and enhanced lifetime of the network.