This article proposes a novel way of grouping users in an orthogonal frequency division multiplexing (OFDM) communication link based on predefined criteria. The total available spectrum is divided into a number of bands equal to the number of groups. For efficient time-frequency resource allocation, sub-carrier and band hopping are used simultaneously. Under some constraints, sub-carriers can also be assigned to different users based on known channel characteristics using dynamic sub-carrier allocation. Sub-carrier and band hopping are used for mitigating the frequency selectivity of the wireless channel and for minimizing and avoiding interference in the system. The proposed scheme is equally applicable to both downlink and uplink. © 2008 Springer Science+Business Media, LLC.