A traffic density scheme to be used for real-time on-ramp metering control to freeways is proposed. The scheme can be used in two situations: a) when there are no traffic flow sensors appropriately located; and b) when available sensors are faulty. It is assumed that some traffic flow and velocity measurements are available in the vicinity of the place where an on-ramp is located. Based on this information, a non-linear adaptive observer for vehicle density is designed that also estimates the mixing factors that define the traffic flow characteristics: free or congested. The design is based on Lyapunov techniques that take advantage of the structure of the conservation of vehicles model.