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Network coding is an effective method to improve channel efficiency by reducing the number of transmissions. However, most existing network coding schemes are based on network layer broadcast. As a result packets become vulnerable to channel errors due to lack of retransmissions. In this paper we present a cross-layer signal processing technique and show that network coded signal mixed from different flows can be separated in the physical layer by exploiting a priori knowledge. Then we propose the soft network coding framework for multi-hop forwarding. This framework enables layer-2 retransmission and further reduces packet errors by combining retransmitted copies. It supports both conventional unicast and the proposed network coding based bi-cast. Simulation results show that compared with plain Decode-and-Forward (DF), the proposed scheme can reduce air-time by about 30% for Poisson arrival traffic while retaining almost the same packet error rate as DF with frame combining.