An efficient method for calculating the step-sizes for a frequency-domain equalizer of a discrete-multitone communications system using signal power estimation and tone grouping (SPE-TG) while on-line. The SPE-TG method is used to calculate a plurality of subchannel step-sizes which are then stored in a lookup table. When on-line, the method uses signal power estimation to select step sizes for each tone, and uses these step sizes for frequency domain equalization. The SPE-TG method simplifies the calculations necessary for frequency domain equalization, thereby saving significant hardware and/or processing resources. The SPE-TG method is reliable and robust, and does not depend upon assumptions about the line, location, or channel.