A control system for a modular hybrid electric vehicle operates an internal combustion engine at a torque level above the driver demanded torque improving the engine's efficiency. A traction motor driveably connected to the engine is operated at a torque level such that the combined torque satisfies the driver demand. The traction motor torque is limited to avoid inefficient combinations of speed and torque at which the motor is inefficient. During idle operation, the traction motor is operated at a torque determined from a battery state of charge and the engine is operated to maintain a predetermined speed. If the engine speed drops below a threshold, motor torque is adjusted to reduce the load on the engine to avoid stalling.