Recently, there has been considerable interest, especially for in-utero imaging, in the detection of functional connectivity in subjects whose motion cannot be controlled while in the MRI scanner. These cases require two advances over current studies: 1) multi-echo acquisitions and 2) post processing and reconstruction that can deal with significant between slice motion during multi-slice protocols to allow for the ability to detect temporal correlations introduced by spatial scattering of slices into account. This paper focusses on the estimation of a spatially and temporally regular time series from motion scattered slices of multi-echo fMRI datasets using a full 4D iterative image reconstruction framework. The framework which includes quantitative MRI methods for artifact correction, is evaluated using adult studies with and without motion to both refine parameter settings and evaluate the analysis pipeline. ICA analysis is then applied to the 4D image reconstruction of both adult and in-utero fetal studies where resting state activity is perturbed by motion. Results indicate quantitative improvements in reconstruction quality when compared to the conventional 3D reconstruction approach (using simulated adult data), and demonstrate the ability to detect the default mode network in moving adults and fetuses with single-subject and group analysis.