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Wireless sensor networks have many challenging issues to be addressed . The network energy consideration is one of the most important of the design challenges. Various routing protocols have been evolved to address this network energy criterion, among them one of the well known protocols is minimum cost forwarding. We consider cost field based approach to minimum cost forwarding with back-off based cost-field set up. In this paper we propose improvements in the above protocol based on threshold considerations-E th & B th ,in which whenever any node in the network fails to satisfy threshold criterion ,new minimum cost paths are formed. This ensures balanced energy consumption in the network and optimum path maintenance .In addition our work also introduces network coding for packet forwarding in above mentioned protocol. Whenever a node is in the forwarding path of more than one source node it combines the packets to be forwarded using distributed random linear network coding. This approach has increased throughput, reduced number of transmissions and increased robustness to link failures over ordinary forwarding. In comparing the similarity in performance achieved by network coding and optimum routing solutions, network coding has the advantage of low complexity distributed solution.