A continuous method for producing composite elastic yarns at speeds up to 700 m/min by (a) stretching (drafting) an elastomeric yarn (e.g., spandex) by 2.0× (100%) to 10.5× (950%) while heating (max. heating temperature 220° C.) in a single or double stage draft, (b) air-jet entangling with a relatively inelastic yarn component to create a composite elastic yarn, and then (c) in-line heat-treating (max. heating temperature 240° C.) the composite elastic yarn. The initial draft stage(s) may also be carried out at ambient temperature. The resulting composite elastic yarn has improved stitch clarity, particularly suited for hosiery, and its properties can be tailored to provide fabric properties for knit and woven fabrics hitherto not possible with standard spandex yarns.