a system and method for a bit - loading algorithm based on an equal error rate principle for each sub - channel used in a discrete multi - tone modulation system . the system and method of the present invention provides a bit - loading algorithm that provides long reach , high data rate and good error performance at a given condition . the bit - loading method and system depends on the shannon channel capacity formula to allocate bits to different sub - channels . for dmt , the system and method tabulates different snr gap for different sub - channels , and constructs a look - up table for the snr gap with different bits to achieve a better performance for the dmt system . in addition , trellis coding across all the sub - channels are optionally supported in dmt , and likewise , the system and method creates another look - up table for variable coding gain provided for the trellis coding gain in the bit - loading algorithm to further improve the system performance , knowing that the trellis coding gain is different for different sub - channels with different bit allocation .