A method and system for packet transmission in a hybrid automatic repeat request (ARQ) system. A modulation and a block length for a transmission are determined based on the average mutual information per bit. The average mutual information per bit is computed based on a current channel signal-to-noise ratio and a plurality of previous transmissions, each being transmitted with a respective coded block length, modulation form, and signal-to-noise ratio. A block error rate is computed for the potential block lengths and modulations based on the average mutual information per bit, and a throughput of the current transmission is determined based on the block error rate. The modulation form and the block length of the transmission are determined based on an analysis of the throughput. If the receiver cannot decode the current transmission, the transmitter repeats the computation to determine the modulation and the block length for retransmission.