A method is disclosed that enables an improved technique for recovering from an error scenario encountered during a call setup that involves a malfunctioning media gateway and the corresponding media gateway controller. The media gateway first detects a malfunction that affects a digital signal processing resource. The media gateway then proactively selects a processing resource available elsewhere at the gateway. The media gateway selects the new processing resource based on criteria that include: i) the capabilities that were identified to handle the packet stream at the affected (faulty) processor; ii) the capabilities of the IP terminal originating the packet stream that is being moved; and iii) the Internet Protocol address of the affected processing resource. Advantageously, an effort is made to avoid having to inform the media gateway controller of the move, thereby minimizing any discontinuity in each packet stream and minimizing the time and processing that are required to establish the call.