The recent research in sensor networks has led to a number of security schemes. The main requirement of wireless sensor networks is not only security but energy efficient security due to resource constrained nature of sensor nodes. We have developed an energy and storage efficient key distribution scheme using leveling and sectoring. In this scheme, node communicates with their neighbors to setup pair wise keys without any central authority. Proposed protocol is fully distributed and uses negligible communication for key setups between different nodes. Distributed nature of this protocol makes it more faults tolerant. Pair wise keys are different for each pair of nodes, so a small part of network is affected due to node compromise attacks. It is fully developed in TinyOS-2.x and tested in avrora emulator. We are also planning to add code of this key management protocol in TinyOS-2.x contributory section. Use of level and sector also solves problem of localization.