A packet forwarding method for optimizing packet traffic flow across communications networks and simplifying network management. The invention provides look-up-free and packet-layer-protocol transparent forwarding of multi-protocol packet traffic among Layer-N (N=2 or upper in the ISO OSI model) nodes. The invention enables flexible and efficient packet multicast and anycast capabilities along with real-time dynamic load balancing and fast packet-level traffic protection rerouting. Applications include fast and efficient packet traffic forwarding across administrative domains of Internet, such as an ISP's backbone or an enterprise virtual private network, as well as passing packet traffic over a neutral Internet exchange facility between different administrative domains.