Heat Exchanger Network (HEN) synthesis is normally carried out in two stages, targeting and design. In the past, most researchers have focused on developing design methods for hand calculations (e.g. the Pinch Design Method). In the present paper, an algorithm for automated synthesis of HEN is presented, which is based on the block concept proposed by Zhu et al (1994a). The basic idea is to simplify a design problem by decomposing it into a number of blocks. In each block, piece-wise stream composites present similar profiles and hot streams are in energy balance with cold streams. After the block decomposition, design is carried out using area targeting principles and a number of newly developed heuristic rules and a best set of matches is selected simultaneously. The initial designs produced by such a method can closely approach the energy and area targets with a small number of units. Good initial solutions are then provided for subsequent cost optimisation. The main advantage of this design strategy is that designs with good quality can be achieved efficiently.