I've got an Acer TM 8006 LMi notebook with integrated 802.11 a/b/g WLAN, running on Windows XP Professional (Norwegian) (Unattended DVD with integrated hotfixes and SP2). Ofcourse I also have the latest drivers and BIOS.

Now at the front of my laptop there is a button to disable/enable WLAN and a light just above the button to identify WLAN activated/inactivated. After a while of activity this light seems to randomly turn off and speed dramatically decrease.

When it happens I might maximum download at 30-40 kb/s so it has net, but I am on a 15mbit line and normally reach speeds of 1,5-2 MB/s. If i click the button and DISABLE and then RE ENABLE WLAN the speed increases again to full speed.

Any ideas what is causing this "sleep" behaviour of my WLAN card?

Could it be that you're to far away from the router and its stepping down the speed to maintain the connection? Static IP or DHCP? Could it be your ISP's DNS servers? Tried backup DNS server?

Check under Device Manager to make sure that Windows isn't turning off the device (or powering it down) to save power. It should be under the Power Managment tab of the device properties.

I'm using DHCP and signal shows up to 100% and full even at 54mbit at G network. Im using a Linksys SRX router with great range! So I don't think that is the issue, but its a good thought indeed. But since the light actually switches off, this might indicate its something else, no?

The power saving was my first thought also, but there is no power saving turned on. At the device properties I can set it to either "Auto", "Best performance" or "Best Battery". It's set to "Best performance".

It does indeed sometime change from 54mbit to lower rates depending on distance form router, so it might be it. I'll try set it to a prefixed rate and static IP to see if it helps.