A mobile terminal includes power control logic which limits the maximum transmit power of the mobile radio telephone to conserve battery power when it is operated in a hand-held mode. The mobile radio telephone includes power control logic which sets the transmit power in response to power control codes received from a base station. The power control codes transmitted from the base station correspond to designated power levels. A signal is generated to indicate whether the mobile radio telephone is operated in a hand-held mode. When the mobile radio telephone is operated in a hand-held mode, the power control logic sets the power level at a maximum hand-held power level which is less than the maximum transmit power level.