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For the past few decades wireless sensor networks have significantly drawn extensive attention of the research community. The sensor nodes are characterised by self organising ability and energy constraint. One of the most important challenges faced in the development of WSN is the optimal energy management. In this paper, we propose a technique by which energy consumption can be reduced by introducing dynamic multilevel hierarchical clustering and where by enhancing the network lifetime. An energy consumption model is framed to make a better analysis of the system. A state transition pattern for the nodes is also allotted for the introduced nodes to make better use of the inherent energy of each node.