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An adaptive data transmission scheme based on variable spreading gain (VSG) is studied in CDMA network in presence of soft handoff and space diversity. The processing gain is varied according to traffic intensity meeting a requirement on bit error rate (BER) at the output of a space diversity system provided by antenna array. Truncated automatic repeat request (T-ARQ) is used in link layer to further improve the performance. The joint impact of soft handoff and space diversity on processing gain adaptation is studied. The overall performance improvement due to VSG based transmission in presence of soft handoff and space diversity at physical layer and T-ARQ at link layer is evaluated. A variable packet size scheme is also studied to meet packet loss constraint.