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It is well known that simulation equivalence is an appropriate abstraction to be used in model checking because it strongly preserves ACTL* and provides a better space reduction than bisimulation equivalence. However, computing simulation equivalence is harder than computing bisimulation equivalence. A number of algorithms for computing simulation equivalence exist. Let \Sigma denote the state space, \to the transition relation and P_sim the partition of \Sigma induced by simulation equivalence. The algorithms by Henzinger, Henzinger, Kopke and by Bloom and Paige run in O(|\Sigma| |\to|)-time and, as far as time-complexity is concerned, they are the best available algorithms. However, these algorithms have the drawback of a quadratic space complexity that is bounded from below by \Omega(|\Sigma|^2). The algorithm by Gentilini, Piazza, Policriti appears to be the best algorithm when both time and space complexities are taken into account. Gentilini et al.'s algorithm runs in O(|Psim|^2|\to|)-time while the space complexity is in O(|P_sim|^2 + |\Sigma| log(|P_sim|)). We present here a new efficient simulation equivalence algorithm that is obtained as a modification of Henzinger et al.'s algorithm and whose correctness is based on some techniques used in recent applications of abstract interpretation to model checking. Our algorithm runs in O(|P_sim| |\to|)-time and O(|P_sim| |\Sigma|)-space. Thus, while retaining a space complexity which is lower than quadratic, our algorithm improves the best known time bound.