Diagnosis of auditory processing disorder is essential for the implementation of appropriate therapeutic or remedial strategies. Formal diagnosis is accomplished through administration of battery of tests. APD is assessed through the use of special tests designed to assess the various auditory functions of the brain. Time compressed speech test provides information about auditory closure and is sensitive to cortical and subcortical regions. The present study aimed at developing a time compressed speech test in Telugu for normal hearing Telugu speaking children. The study also aimed at obtaining perceptual norms of bisyllabic phonetically balanced words in different age groups of 8-12 years using the test with four compression levels (0%, 20%, 40% and 60%). The results revealed that: • With increase in compression level the scores generally dropped. However, the effect of compression at each of the age groups was not identical. • There was a significant decrease in performance observed with increase in the level of compression.