An error recovery system and method for use in a data communication system in which a sender station transmits information packets with sequentially numbered information to a receiver station. The system includes selective retransmission of information packets which have had errors in transmission based on the order of transmission of information packets independent of the sequential (sequence) number of the information packets. A list, such as a linked list having a beginning and an end, is provided and, at the time of transmission of information packets, an identification of the transmitted information packet is placed at the end of the list. A status packet is provided by the receiver station to the sender station which identifies the sequential number of information packets which have been correctly received. Any information packets which have not been acknowledged as correctly received are retransmitted only if such packet was transmitted earlier in time than an information packet which has been acknowledged as correctly received as indicated by the position of the information packets in the list. The receiver station detects the presence of gaps and transmits a status packet to the sender station either responsive to a request from the sender station or responsive to detection of a gap.