A new approach for distribution of grid points on the surface and in the volume has been developed. In addition to the point and line sources of prior work, the new approach utilizes surface and volume sources for automatic curvature-based grid sizing and convenient point distribution in the volume. A new exponential growth function produces smoother and more efficient grids and provides superior control over distribution of grid points in the field. All types of sources support anisotropic grid stretching which not only improves the grid economy but also provides more accurate solutions for certain aerodynamic applications. The new approach does not require a three-dimensional background grid as in the previous methods. Instead, it makes use of an efficient bounding-box auxiliary medium for storing grid parameters defined by surface sources. The new approach is less memory-intensive and more efficient computationally. The grids generated with the new method either eliminate the need for adaptive grid refinement for certain class of problems or provide high quality initial grids that would enhance the performance of many adaptation methods.