An arrangement is disclosed for recovering from faults in transmission equipment or facilities forming so-called virtual circuits for transmitting packets in a network. Faults are detected in transmission paths associated with a network node and a fault indication message is generated for each virtual circuit passing through the node that is affected by the fault. The fault indication messages are then transmitted on corresponding ones of the affected virtual circuits. If any of the affected virtual circuits are termianted in the node, they are switched to alternate virtual circuits. Otherwise, the fault indication messages are transmitted on corresponding virtual circuits over facilities connected to the node to other unknown nodes. A node receiving a fault indication message determines whether the corresponding virtual circuit is terminated at the node or passes through it to some other unknown node. If an affected virtual circuit is terminated in the node, it is switched to an alternate virtual circuit. If the affected virtual circuit is not terminated in the node, the corresponding fault indication message is passed through it on that virtual circuit over a facility to some other unknown node.