A microphone picks up a signal in response to both the acoustic output of the speaker and the ambient noise at the loudspeaker location, for example, in an automobile. The microphone output signal and the signal which is to be provided to the loudspeaker with variable amplification are each subjected to envelope detection. The two envelope curve signals are compared to produce a signal representative of their similarity, the similarity being high when ambient noise is low or absent. The similarity signal is then processed with reference to a reference voltage which varies with the setting of the manual volume control of the amplifier interposed ahead of the loudspeaker. That amplifier has an automatic volume control input to which a control signal generated in response to the envelope similarity signal is applied to raise the amplification and the loudspeaker output level when ambient noise, detected by the similarity of the envelope signals, is present or increases. The system and method have the advantage that special calibration of the system in place of use, for proper balancing of the microphone output against the useful signal is made unnecessary. The envelope signal comparison is simply performed by comparing the respective signs of the slopes of the respective envelope curves to supply a first output value when the signs are identical and a second output value when they are opposite. The output values are weighted by a factor dependent upon signal dynamics (derived from average value and dynamic range) to reduce the larger output value and at the same time increase the smaller one by a dynamic factor. The succession of weighted output values thus produced is integrated to produce the similarity signal.