A system and method for forming application dependent dynamic data packet format in a wireless sensor network is provided. The system comprises one or more sensor nodes, wherein each sensor node comprises one or more sensors for sensing physical events. Each sensor is defined as an active or an inactive sensor based upon the application requirement. The system also comprises one or more processing units for converting the physical events sensed by the active sensors to corresponding sensed data in digital format and forming dynamic length data packets comprising the sensed data and a sensor identifier field for conveying the identities of the active sensors.