This paper presents a new approach in realizing Virtual Channels tailored for Network on Chip implementations. The technique makes use of a flow control mechanism based on adaptive input rate control where the required buffer size is independent of the number of channels and the packet size. The resulting implementation requires only 3% of the memory space used in a conventional implementation of virtual channels. The efficient use of memory storage does also deliver performance improvements that can be up to 15% for a normal network configuration.