In mobile IP based networks, most of the packet drops occur due to mobile handoff from one sub-network to another sub-network or larger delays in between sender and receiver due to encapsulation and tunnelling of packets. Packet loss during the handoff operation in mobile IP with route optimization and smooth handover will degrade the performance of Transmission Control Protocol (TCP). To prevent performance degradation due to mobile handover packet drops, a number of packet buffering and packet forwarding mechanisms have been proposed. However, mobile user continually change its point-of-attachment and can sometimes move into congested base station of foreign agent sub network, its buffered forwarded packets are likely to be dropped at the new base station. This can lead to decrease in congestion window size at the sender TCP, which will severely degrade the performance of TCP even though there is no congestion within the network. In this approach, hardware resources (packet buffers) are efficiently utilized, at the same time performance degradation of TCP due to congested base station of current mobile node is minimized through packet buffers, markers and with modification in Mobile IP binding update message.