In this paper, we propose a binary feedback scheme for congestion control in computer networks using a gradient-based mechanism which employs neural network modelling of the system dynamics. The optimal direction for rate adjustment at the source is based on a single bit feedback signal which depends upon the sign of the sensitivity of the system performance index with respect to queue input rate. The paper presents the scheme and the analysis that went into the choice of the various decision mechanisms. Simulation results are presented to show the performance of the gradient based technique as compared to the conventional queue-based approach. Copyright © 2000 John Wiley & Sons, Ltd.