—Transmit power allocation techniques are very important to manage interference in small-cell networks. While available power allocation algorithms in the literature rely on a predefined routing protocol, we propose in this paper a power-efficient two-step algorithm that allows power allocation and routing to be performed jointly in femto-relay networks. First, we propose an interference-based partitioning method to cluster the femto-relays, then we adopt an iterative and distributed algorithm, inspired from game theory, for efficient transmit power allocation. We show that the corresponding power allocation game possesses a pure Nash equilibrium which is reached by the proposed algorithm within a number of iterations per femto-relay which can be as small as 1. Moreover, we show that our approach grants significant improvements in terms of power consumption, and permits the total consumed power to be divided by about 6 and 3 when respectively compared to the direct transmission and shortest path techniques.