A method and apparatus for optimizing the system capacity of an Orthogonal Frequency Division Multiplexing (OFDM) system that uses with Multiple-Input Multiple-Output (MIMO) antennas. In a receiver, a target quality of service (QoS) metric and reference data rate are set. The target QoS metric may be set to a predetermined value and/or may be adjusted dynamically with respect to packet error rate (PER) by a slow outer-loop control processor. The QoS of received signals are compared to the target QoS. Depending on the comparison, the receiver generates a channel quality indicator (CQI) which is sent to the transmitter. The CQI is a one or two bit indicator which indicates to the transmitter to disable, adjust or maintain data transmission rates of particular sub-carriers, groups of sub-carriers per transmit antenna, or groups of sub-carriers across all transmit antennas. At the transmitter, the transmitted data rate is disabled, adjusted or maintained.