Improved amplify-and-forward relaying in a communication network is described, including an example network of multiple single-antenna mobile stations, a multi-antenna relay station, and a multi-antenna base station. Bi-directional communication with improved transmission efficiency is enabled by suitable transmit/receive processing at the relay station without drawbacks of current relaying techniques. Linear transmit and receive processing matrices are disclosed, and it is shown that the numbers of antennas at the relay station and the base station can be substantially the same without reducing network capacity, closely matching the performance for low and high signal to noise ratios of current techniques that require the relay station to have twice as many antennas as the base station.