The dual-fuel application using ethanol and diesel fuels can substantially improve the classical trade-off between oxides of nitrogen (NOx) and smoke, especially at moderate-to-high load conditions. However, at low engine load levels, the use of a low reactivity fuel in the dual-fuel application usually leads to increased incomplete combustion products that in turn result in a significant reduction of the engine thermal efficiency. In this work, engine tests are conducted on a high compression ratio, single cylinder dual-fuel engine that incorporates the diesel direct-injection and ethanol port-injection. Engine load levels are identified, at which, diesel combustion offers better efficiency than the dual-fuel combustion while attaining low NOx and smoke emissions. Thereafter, a cycle-to-cycle based closed-loop controller is implemented for the combustion phasing and engine load control in both the diesel and dual-fuel combustion regimes. The controller actively regulates the fuelling rates of both fuels and dynamically controls the injection timing of the diesel direct-injection. A mode switching scheme is developed and implemented in the closed-loop controller to switch between diesel and dual-fuel combustion modes for optimized emissions and efficiency, without compromising the combustion stability. The switching algorithm is validated through steady-state and transient engine tests with continuous measurements of fuel flow, engine load, NOx and PM emissions to demonstrate the effectiveness of balancing the efficiency and emissions. By applying the mode switching strategy in the dual-fuel engine, stable, efficient, and clean combustion is achieved from idle to full-load conditions.