Abstract: For satisfying the need of increasing number of users, their demands for the services and to provide enhanced indoor coverage, Long Term Evolution (LTE) has developed small cellular base stations called Femtocells. However, limited spectrum Availability in the cellular networks causes severe interference Issues in the neighboring femtocell users transmitting in the same radio band. In densely deployed environments, interference problem in co-channel femtocell networks causes significant degradation in performance. In this paper, we propose a Cluster-Aware Soft Frequency Reuse (CASFR) scheme that assigns distinct set of Physical Resource Blocks (PRB) s to each interfering femtocells. At first this scheme checks interference level of the Femtocell User Equipment (FUE) to identify the interfering femtocells. It then form a cluster of all interfering femtocells and apply Cluster Aware Soft Frequency Reuse (CASFR) algorithm to partition area of each femtocell into cell-center and cell-edge regions then assign non-interfering unique sets of RBs to the cell-center and cell-edge users of all the interfering femtocells. This method achieves improvement in the performance for the overall femtocell network by efficiently alleviating the uplink and downlink interference.