The vision of connecting billions of battery operated devices to be used for diverse emerging applications calls for a wireless communication system that can support stringent reliability and latency requirements. Both reliability and energy efficiency are critical for many of these applications that involve communication with short packets which undermine the coding gain achievable from large packets. In this paper, we study a cross-layer approach to optimize the performance of low-power wireless links. At first, we derive a simple and accurate packet error rate (PER) expression for uncoded schemes in block fading channels based on a new proposition that shows that the waterfall threshold in the PER upper bound in Nakagami-m fading channels is tightly approximated by the m-th moment of an asymptotic distribution of PER in AWGN channel. The proposed PER approximation establishes an explicit connection between the physical and link layers parameters, and the packet error rate. We exploit this connection for cross-layer design and optimization of communication links. To this end, we propose a semi-analytic framework to jointly optimize signal-to-noise ratio (SNR) and modulation order at physical layer, and the packet length and number of retransmissions at link layer with respect to distance under the prescribed delay and reliability constraints.