A system and method is provided for traffic management and regulation in a packet-based communication network, the system and method facilitating proactive, discriminating congestion control on a per flow basis of packets traversing the Internet via use of a Weighted Random Early Detection (WRED) algorithm that monitors the incoming packet queue and optimizes enqueuing or discard of incoming packets to stabilize queue length and promote efficient packet processing. During optimized discard conditions, the system and method discern a relative priority among incoming packets, distribute packets with a relatively high priority and discard packets with a relatively low priority. Additionally, packet traffic are policed and discarded according to packet type, quantity or other predetermined criteria. The present invention performs in periodic mode, demand mode or both, and can be implemented as a hardware solution, a software solution, or a combination thereof.