A system and method can support routing packets between a plurality of switches in a middleware machine environment, thereby supporting Internet Protocol (IP) based management traffic via enabling IP over Infiniband (IPoIB) communication in the middleware machine environment. The plurality of switches can perform routing for inter-switch traffic in the middleware machine environment using a first routing algorithm. Then, a switch in the middleware machine environment can be selected as a hub switch for inter-switch traffic that can not reach destination using the first routing algorithm. Furthermore, a routing table associated with the hub switch can be updated when a path exists between a source switch and a destination switch via the hub switch.