In this paper, a flexible scheme with exclusive-OR (XOR) coding is suggested for improving error performance in two-way relay networks. The sources, exchanging their packets through relay(s), encode multiple packets into one packet and the encoded packet helps correct decoding of actual packets exchanged between sources. We also employ orthogonal frequency division multiplexing in the considered two-way relay network to counteract the frequency selective fading nature of wireless channels. The proposed scheme serves to attain frequency diversity gain and numerical results show that this scheme gives better coded bit error ratio performance than the conventional scheme.