The present invention provides location privacy against third parties while allowing route-optimized communication between the correspondent node and the mobile node. The mobile node's home address is hidden from an external observer thereby thwarting traffic analysis based attacks where a Home Address is correlated with a Care of Address of a mobile node (MN). A “privacy label” is used in place of a home address associated with the mobile node. The privacy label is supplied by the mobile node to the correspondent node in a way that that allows the privacy label to be bound to the home address, but does not allow the home address to be visible during the exchange. The privacy label may be also used to help prevent against replay attacks.