A system and method can support efficient packet switching in a network environment. The system can comprise an ingress buffer on a networking device. The ingress buffer operate to store one or more incoming packets that are received at an input port on the networking device, wherein the input port is associated with a plurality of source virtual lanes (VLs). Furthermore, the ingress buffer operate to reallocate buffer resource in the ingress buffer from being associated with a first source VL in the plurality of source VLs to being associated with a second source VL in the plurality of source VLs, and send an initial credit update to the input port for the first source VL and the second source VL.