An efficient algorithm to dynamically allocate the bandwidth in the Ethernet Passive Optical Network (EPON) is proposed. The algorithm provides bandwidth allocation between Optical Network Units (ONUs) and also within the ONUs for different types of traffic. It also efficiently divides the excess bandwidth between the ONUs. The proposed algorithm is compared with the existing Russian Doll Model Dynamic Bandwidth Allocation (RDM DBA) algorithm and Min DBA algorithm. The results show a considerable improvement in bandwidth and fairness. © Research India Publications.