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Biclustering is simultaneous clustering of both rows and columns of a data matrix. A measure called mean squared residue (MSR) is used to simultaneously evaluate the coherence of rows and columns within a submatrix. In this paper a novel algorithm is developed for biclustering gene expression data using the newly introduced concept of MSR difference threshold. In the first step high quality bicluster seeds are generated using K-means clustering algorithm. Then more genes and conditions (node) are added to the bicluster. Before adding a node the MSR X of the bicluster is calculated. After adding the node again the MSR Y is calculated. The added node is deleted if Y minus X is greater than MSR difference threshold or if Y is greater than MSR threshold which depends on the dataset. The MSR difference threshold is different for gene list and condition list and it depends on the dataset also. Proper values should be identified through experimentation in order to obtain biclusters of high quality. The results obtained on bench mark dataset clearly indicate that this algorithm is better than many of the existing biclustering algorithms.