Unmanned aerial vehicles (UAVs) are becoming popular in realizing many civilian and military applications. Many conventional military applications require high-cost large and medium-sized UAVs. On the other hands, small UAVs can be adapted to many conventional military applications at a lower cost as compared to large UAVs. In this case, a swarm of small UAVs should carry out the task generally accomplished by large UAVs. Due to the fast movements of the UAVs in a swarm, the communications between the UAVs suffer packet drops due to frequent topology changes. This leads to challenges in maintaining the network topology required for inter-UAV communication. Data loss due to sudden topology changes is especially important for hot-spot areas generally located at the center of the topology. In this study, a balanced topology formation approach is proposed by taking the data traffic and node density of the UAV network into account. Furthermore, the network is divided into clusters with the aim of optimising the network delay and reducing packet drop rate. The results obtained from the clustering algorithm are compared with the previously proposed methods for UAV and mobile ad-hoc networks (MANET). The results have shown that the proposed method balances data traffic better and a reduced packet loss rate is achieved as compared to the previously proposed methods.