We propose a closed-loop, dynamic rate adaptation algorithm that can be implemented in all IEEE 802.11 a/b/g compliant wireless local area networks. Our proposed algorithm is a culmination of the best attributes of the transmitter-based Auto-Rate Fall-back (ARF) and the Receiver-based Auto-Rate (RBAR) control mechanisms with additional practical features to facilitate multipath fading channel sensing and feedback control signalling. Unlike ARF, our technique supports real-time feedback information beyond frame acknowledgments through the use of reserved bits in the SERVICE field of the Physical Layer Convergence Protocol (PLCP) header. Unlike RBAR, no modification of the medium-access control (MAC) frame format is necessary for feedback control since the initial channel state information is conveyed via these same reserved bits. Our proposed scheme is transparent in the sense that devices using our technique can co-exist with other 802.11-compliant devices in the same basic service area. By combining RTS/CTS handshake with data fragmentation, we differentiate data loss (and reduction in goodput) due to MAC collision from data corruption due to bad physical channel state and poor rate selection. The goodput gains of our approach, when compared to ARF and RBAR, are measured via simulation for various traffic load conditions in stationary and non-stationary multipath fading channel models.