A rate policing algorithm for packet flows is based on counters and threshold checking. The rate policing algorithm utilizes a state machine having four links: (1) compliant state to compliant state; (2) transition from compliant state to non-compliant state; (3) non-compliant state to non-compliant state; and (4) transition from non-compliant state to compliant state. Depending on the values obtained from the counters and utilizing the threshold values, it is determined whether a flow rate for packets is compliant or non-compliant.