A system and method can support a middleware machine environment that include one or more gateway nodes. One or more gateways that resides on the one or more gateway nodes are provided in a subnet with a plurality of host servers, wherein each host server is associated with one or more virtual network interface cards (vNICs). The middleware machine environment also include a plurality of virtual hubs (vHUB) on the one or more gateways, with each vHUB associated with one or more said vNICs. The gateways are adapted to connect with an external network, and operate to forward a multicast packet to both the external network and the plurality of host servers via the plurality of vHUBs, and prevent multicast packet traffic loops between the subnet and the external network.