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We propose a hierarchical connected dominating set (CDS) based algorithm for clustering in mobile ad hoc networks (MANETs). Our algorithm is an extension of our previous connected dominating set based clustering (CDSC) algorithm . We extended the levels of the CDS to two levels and improved functionality at each level by providing additional rules to make sure that every node belongs to a single cluster. In the first level of the algorithm, the elements of the CDS are formed, based on CDSC Algorithm heuristics with improved functionality. The second level of the algorithm is executed among the CDS elements to find the second level CDS where each element belonging to the set represents a group of CDS elements, therefore a group of clusters. We show that this approach is more scalable and simpler to implement than a single level algorithm and that it also provides more balanced two level clusters due to its distributed nature. We also show that the number of levels of the algorithm can be extended to more than two layers providing more populated clusters, therefore providing a level of cluster and group membership structure within the MANET. This hierarchical groups can be used for different application needs at each level such as multi-cast communication or security purposes in MANETs.