Active queue management (AQM) is an effective means to enhance congestion control, and to achieve trade-off between link utilization and delay. The de facto standard, random early detection (RED), and many of its variants employ queue length as a congestion indicator to trigger packet dropping. Despite their simplicity, these approaches often suffer from unstable behaviors in a dynamic network. Adaptive parameter settings, though might solve the problem, remain difficult in such a complex system. Recent proposals based on analytical TCP control and AQM models suggest the use of both queue length and traffic input rate as congestion indicators, which effectively enhances stability. Their response time generally increases however, leading to frequent buffer overflow and emptiness. In this paper, we propose a novel AQM algorithm that achieves fast response time and yet good robustness. The algorithm, called Loss Ratio-based RED (LRED), measures the latest packet loss ratio, and uses it as a complement to queue length for adaptively adjusting the packet drop probability. We develop an analytical model for LRED, which demonstrates that LRED is responsive even if the number of TCP flows and their persisting times vary significantly. It also provides a general guideline for the parameter settings in LRED. The performance of LRED is further examined under various simulated network environments, and compared to existing AQM algorithms. Our simulation results show that, with comparable complexities, LRED achieves shorter response time and higher robustness. More importantly, it trades off the goodput with queue length better than existing algorithms, enabling flexible system configurations