Reduction of overhead normally caused by the addition of a second IP header in case of tunneling between a home agent and a mobile node located in a foreign network is achieved by replacing an encapsulated first IP header by a tunnel identifier. The home agent and the mobile node agree on a tunnel identifier value at the time of binding update and acknowledgement. The tunnel identifier may be used independently at the home agent and at the mobile node to reconstruct the first IP header, which identifies a correspondent node. Because the encapsulated first IP header is not terminated at either of the home agent or mobile node, overhead reduction is not impacted by eventual transmission error or loss between these two nodes.