In this paper we derive the optimal space-time power allocation scheme that minimizes the BER for MIMO fading channels when ideal channel state information (CSI) is available at the transmitter and receiver. We then show that this scheme achieves exponential diversity. Simulation results corroborating the theoretical analysis are then presented for MIMO Rician fading channels where we show that for two transmit and two receive antennas the presented scheme achieves more than 3 dB gain over best known Power Allocation Schemes. © 2011 IEEE.