A system and method for introducing in-band network management packets (INMPs) in a Multi-Protocol Label Switching (MPLS) network. MPLS is an emerging technology, which integrates Internet Protocol (IP) routing with label switching techniques. MPLS intends to provide new capabilities in the area of traffic engineering for IP networks. These traffic engineering capabilities will have to be combined with a set of complementary operation, administration and maintenance (OA&M) functions for effectively managing and operating MPLS-based networks. This invention uses INMPs for carrying OA&M information to label switching routers (LSRs) for effectively managing and operating MPLS-based networks. This invention also includes techniques for distinguishing INMPs from user packets in an MPLS network. This invention further includes using a predetermined code in a shim header of an MPLS packet to determine whether an MPLS packet is an INMP or a user packet. The predetermined code may be provided in an experimental field or a time-to-live field in the shim header of the packet. Alternatively, a label may be reserved for distinguishing an INMP from a user packet.