A fast algorithm for inverse airfoil design using an efficient panel method for potential flow calculation is presented. The method employs linear vortex distributions on the panels and a consistent procedure for imposing the Kutta condition, thus eliminating the spurious aerodynamic loading that usually appears at a cusped trailing edge. The algorithm searches the airfoil ordinates attending to a given surface velocity distribution with fixed abscissas. It begins with a guessed starting shape and successively modifies it by an iterative process, such that the normal velocity vanishes and the calculated velocity distribution gradually approaches the required one. Each iteration is performed in two main steps: 1) the flow calculation step; 2) the geometrical marching step, where the calculated velocity distribution is compared with the required one and a transpiration model is applied to modify the current shape towards another one more close to the target shape. The geometrical marching is conducted by varying the panel slopes as a function of the normal velocity excess induced by the difference between the required and calculated velocities. A scheme is applied in order to close the body shape. Various test cases were carried out and are presented for the efficiency and robustness validation of the proposed inverse algorithm