Broadband Integrated Services Digital Network (B-ISDN) is intended to provide various services in telecommunications like voice, video, and data communication. For realizing the B-ISDN network, Asynchronous Transfer Mode (ATM) is one of several data transfer technologies that are proposed and currently being developed. Several flow control methods have been proposed for data cell traffic in ATM network. One of the feedback control mechanisms is credit-based flow control that is proposed to handle an Available Bit Rate (ABR) traffic. The credit based mechanism is applied in Local Area Network (LAN) and usually uses static buffer allocation method. When the conventional credit-based algorithm is applied in the LAN system, the problems such as low utilization of node buffer and large delay of source data will occur. In this paper, we propose a new algorithm that is called stop and release credit method to make credit-based flow control more effective. According to simulation results, proposed method will make high utilization of node buffer and small delay of source data.