In recent times there has been a rapid growth in the field of wireless networks along with the advent of portable devices. This development has led to a stage where it is now become a prime concern for providing the wireless clients with a secure and efficient group key management system for services such as mobile data access, information retrieval and so on. In this paper we propose a new group key management algorithm suitable for the wireless environment. This new approach is a two-level structure where the group of users are sub-divided into clusters, hence reducing the rekeying cost in the key updating. We demonstrate that our proposed approach can achieve better efficiency when compared to the conventional Logical Key Hierarchy scheme.