A system and method for predicting future interference power in packet-switched networks is disclosed, allowing improved performance in such networks via optimized link adaptation and power control. In an embodiment for use in a cellular network, Kalman filtering can be used to provide the interference estimation through identification of the number of active co-channel interferers in the cellular networks and correlation of the interference power with the number of active interferers. A two-dimensional Kalman filter can be used to exploit that correlation to enhance prediction accuracy. In an alternative embodiment, a one-dimensional Kalman filter can be used where the number of active interferers is not considered.