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An important issue in optical burst switched (OBS) networks is the loss of bursts at intermediate nodes due to contention. Such contention losses, usually do not mean a situation of congestion. In this paper, we propose for the first time, a loss recovery mechanism using forward error correction to recover bursts that are lost due to contention. Using FEC, for every K bursts, N-K redundant bursts are also sent to the destination. This redundancy can be used to recover from losses in the K data bursts. Our mechanism can also be used to recover from losses due to network component (link/node) failures. We demonstrate the effectiveness of our mechanism by comparing with no protection and 1+1 protection using simulation studies.