The disclosure is directed at a system and method for packet distribution in a network. After receiving a data packet, at least one network function associated with the packet, at least one link aggregation group (LAG) associated with the packet, and a variance associated with a plurality of links within the at least one LAG are determined. A determination as to whether the variance is above a pre-determined threshold is then performed and if the variance is above the threshold, a path for the packet based on capacity associated with each of the plurality of links is determined. Otherwise a path based on capacity of each of a plurality of network function instances associated with the at least one network function is determined.