This document specifies a method by which an IP datagram may be encapsulated (carried as payload) within an IP datagram, with less overhead than "conventional" IP encapsulation that adds a second IP header to each encapsulated datagram. Encapsulation is suggested as a means to alter the normal IP routing for datagrams, by delivering them to an intermediate destination that would otherwise not be selected by the (network part of the) IP Destination Address field in the original IP header. Encapsulation may be serve a variety of purposes, such as delivery of a datagram to a mobile node using Mobile IP.