A method and system enables policy-based traffic forwarding in a data network by implementing policy-based control over propagation of LSA messages through the data network. A route tag is asserted in respect of a link state advertisement (LSA) message advertising a network address. Propagation of the LSA through the data network is controlled using the asserted internal route tag. At each hop, a policy decision affecting the forwarding of the LSA is made. Exemplary policy decisions include, Pass and Discard. In addition, the forwarding table may be updated using the route and address information contained in the LSA. In this case, routes entered in the forwarding table may be tagged as an inclusion route or an exclusion route. This may be based on the value of an exclusion route flag, which can, for example, be provided as a binary null0null or null1null inserted into an unused portion of the options field of the LSA.