A system and method for compensating for differences between a recovered receive clock and an internal transmit clock in an elastic buffer and thereby preventing corruption of data. In one embodiment, the system comprises a circularly accessed buffer coupled to read and write logic. The read and write logic read and write to locations within the circular buffer as indicated by respective read and write pointers. The system further comprises control logic which compares the pointers to determine whether the buffer is approaching an underflow or overflow condition and adds or deletes fill words between frames of data to compensate for the underflow or overflow condition. In one embodiment, the system includes fill word logic which is configured to add a fill word bit to each received word and to set or clear the fill word bit to indicate whether or not the corresponding word is a fill word.