Active queue management (AQM) in routers has been proposed as a solution to some of the scalability issues associated with TCP’s pure end-to-end approach to congestion control. However, beyond congestion control, controlling queues in routers is important because unstable router queues can cause poor application performance. Existing AQM schemes explicitly try to control router queues by probabilistically dropping (or marking) packets. We argue that while controlling router queues is important, this control needs to be tempered by a consideration of the overall lossrate at the router. Solely attempting to control queue length can induce loss-rates that have as negative an effect on application and network performance as the large queues that existing AQM schemes were trying to avoid. Thus controlling queue length without regard to loss-rate can be counterproductive. In this work we demonstrate that by jointly controlling queue length and loss-rate, both network and application performance are improved. We present a novel AQM design that attempts to simultaneously optimize queue length and loss-rate. Our algorithm, called loss and queuing delay control (LQD), is a control theoretic scheme that explicitly treats loss-rate as a control parameter. LQD is shown to provide stable control analytically and is evaluated empirically by comparing its performance against other control theoretic AQM designs (PI and REM). The results of evaluation in a laboratory testbed under realistic traffic mixes and loads show that LQD results in lower overall loss rates and that applications see lower average queue lengths than with PI or REM.