Disclosed herein are systems, computer-implemented methods, and tangible computer-readable storage media for generating a natural language spoken dialog system. The method includes nominating a set of allowed dialog actions and a set of contextual features at each turn in a dialog, and selecting an optimal action from the set of nominated allowed dialog actions using a machine learning algorithm. The method includes generating a response based on the selected optimal action at each turn in the dialog. The set of manually nominated allowed dialog actions can incorporate a set of business rules. Prompt wordings in the generated natural language spoken dialog system can be tailored to a current context while following the set of business rules. A compression label can represent at least one of the manually nominated allowed dialog actions.