A method and apparatus for determining the transmission power level between a plurality of stations located within the coverage area of a basic service set (BSS) in a wireless local area network (WLAN). The receiving station measures a received signal power from the transmitting station, then the path loss estimation is computed based on the difference between the received signal power and the transmit power level extracted from the incoming signal. The computed path loss is updated according predetermined criteria. Based on the updated path loss information, the transmit power level and/or the transmission rate of a receiving station is adjusted.