- Traffic Engineering objective is to optimize network resource utilization. Although several works have been published about minimizing network resource utilization, few works have been focused in LSR label space. This paper proposes an algorithm that gets advantage of the MPLS label stack features in order to reduce the number of labels used in LSPs. Some tunnelling methods and their MPLS implementation drawbacks are also discussed. The described algorithm sets up the NHLFE tables in each LSR creating asymmetric tunnels when possible. Experimental results show that the described algorithm achieves a great reduction factor in the label space. The presented works applies for both types of connections: P2MP and P2P. Keywords – Asymmetric tunnels, label space, label stack, label space reduction, longest segment first, NHLFE, traffic engineering, MPLS.