Abstract: Data communication in networking is done through exchanging the data packets between the end points. The packet loss may occur in wired/wireless network during the data transmission. Losses in wired network are caused because of congestion in routers, but losses in wireless network may occur because of interference or network congestion. The main problem in wireless network compared to wired network is classification of losses. Transport protocols are response to handle the losses, if the transmission uses existing protocols like TCP, the losses are always classified as congestion loss by sender, causing reduced throughput. Main aim of this paper is to reduce the losses and improve the throughput of wireless network. This can be achieved by using both loss differentiation and reduction method together to achieve high throughput. RARELD (Receiver Assisted Random Early Loss Differentiation) is a loss differentiation method used to classify type of loss and also used to reduce losses in wireless network. In this method both sender as well as receiver are used to optimize loss occurred in network.