Load balancing is one of the main challenges of structured P2P systems that use distributed hash tables (DHT) to map data items (objects) onto the nodes of the system. In a typical P2P system with N nodes, the use of random hash functions for distributing keys among peer nodes can lead to O(log N) imbalance. Most existing load balancing algorithms for structured P2Psystems are not proximity-aware, assume uniform distribution of objects in the system and often ignore node heterogeneity. In this paper we propose a load balancing algorithm that considers node heterogeneity, changes in object popularities, and link latencies between nodes. It also considers the load transfer time as an important factor in calculating the cost of load balancing. We present the algorithm using node movement and replication mechanisms. We also show via simulation how well the algorithm performs under different loads in a typical structured P2P system.