A shared bus arbitration scheme for a data communication system is provided, where a shared bus is connected to a plurality of bus masters and resources, some resources having higher priority than the others and including a peripheral device. Each master may request control of the shared bus and is adapted to perform short transfers and long burst transfers on the shared bus between a resource and the master. A shared bus arbiter is utilized for dynamically determining the highest priority request between a number of shared bus requests, and granting control of the shared bus to the highest priority requesting bus master. The arbiter utilizes a three-level priority hierarchy arbitration scheme where the highest priority level is given to short message transfer requests on the higher-priority system resources, the intermediate priority level is given to short message transfer requests on the lower-priority system resources, if there are no outstanding higher priority level requests, and the lowest priority level is given for long burst transfers, if there are no outstanding short message transfer requests.