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In this paper, a new adaptive channel assignment algorithm in cellular mobile systems is proposed and examined in comparison with a dynamic load balancing strategy, the load balancing with selective borrowing (LBSB) algorithm. The new algorithm is based on the fixed channel assignment strategy as its underlying scheme, that is, it assigns a fixed number of channels to each cell permanently. At run-time, it attempts to balance dynamically the imbalance of available channels between the cells. Two thresholds, light and heavy, are introduced to classify the cells in the system into three classes according to the number of available channels in the cells: light, moderate, and heavy cells. Each cell is assumed to know its own exact state (the number of the available channels) and to which class it belongs at any given instant. The MSC keeps the state information of the cells and runs the channel borrowing algorithm to borrow free channels from the light cells for the heavy cells whenever it finds any heavy cells. The moderate cells are not allowed to borrow any channels from any other cells nor lend any channels to any other cells. When making a borrowing decision, the states of the co-channel cells of a potential lender cell are also taken into account to prevent a potential channel borrowing loop. The results indicate that the new algorithm performs better than the LBSB algorithm with respect to the call blocking probability.