Optimal efficiency control of induction motor drives implies operation at reduced flux levels with light loads. Two problems in light load operation are a large speed drop after sudden load torque increase and slow acceleration. In order to improve response in these transients, an algorithm for optimum dynamic distribution of the available maximum inverter current into the flux-producing and the torque-producing stator current components is developed in this paper. The proposed algorithm accounts for the main flux saturation effect in the machine and the dynamics of the flux variation. Its performance is illustrated by means of Simulation and experimental results. Superiority of the developed algorithm over some of the existing methods is proved by comparing the speed drops, which result after sudden load torque increase during operation at light load, and by examining an acceleration transient under light load condition.