A T-matrix based method of solution of the multiple scattering problem presented in Gumerov and Duraiswami (J. Acoust Soc. Am., 112, 2002, 2688- 2701) can in practice be applied to computation of relatively small problems (up to hundreds of scatterers), since the number of operations it requires grows with the the number of scatterers N as O(N^3), and with the sixth power of the wavenumber. In this study we present a method, which combines iterative techniques with the multilevel fast multipole method that employs fast translation algorithms. We show that in this case the number of operations for a matrix-vector multiplication grows with N as O(N log N) and with the third power of the wavenumber. We present details of the method. We also discuss convergence of the iterative techniques, selection of the truncation number, errors in the solution, and other issues related to the use of the method in practice. Results of the solution of test problems obtained with the method for N can be substantially large (N ?? 102 to 104; for different ranges of wavenumbers). UMIACS-TR-2004-42