This work proposes a cluster oriented channel assignment and difference of two convex functions (d.c.) programming based power optimisation algorithm for the downlink device‐to‐device (D2D) communication underlaying cellular networks. The authors' objective is to maximise D2D throughput while protecting the performance of existing cellular users (CUs) whose channel is reused among multiple D2D pairs, by imposing a minimum rate requirement constraint on each CU. The joint channel and power optimisation problem is a mixed integer non‐linear programming problem that is NP‐hard to solve. Therefore, a three stage solution is proposed: cluster formation to minimise the interference among the D2D pairs followed by an optimal channel assignment using the Hungarian algorithm and then an iterative power optimisation algorithm based on d.c. programming. Moreover, the transmission power of base station and D2D users is optimised on the same channel while considering the mutual interference among D2D pairs. Numerical results verify the effectiveness of the proposed resource allocation scheme in terms of the D2D sum rate and the number of successful transmission of D2D users. Moreover, the iterative power optimisation algorithm shows a fast convergence behaviour. In addition to this, the energy efficiency is also analysed with respect to various parameters.