A method and system for optimizing bandwidth allocation in a fiber channel network having a fiber channel switch element, is provided. The switch element includes, a port control module having a receive and transmit segment, wherein the transmit segment is programmed to block frame transmission from a particular frame source port for a certain duration based on a programmable threshold value. The method includes, enabling a bandwidth limitation counter; and programming the threshold value for blocking frame transmission from a frame source port for a certain duration and during this duration, other source ports may be chosen for frame transmission. After a frame is transmitted from a source port, a tag valid blocking from the same source port is used to block frame transmission. A quality of service register is used to store the threshold value and the threshold value is programmable.