Hepatitis B virus (HBV) surface antigen mutations may lead to immune escape and eventually cause failure of immunization. In this report, we identified immune escape variants in immunized babies born to hepatitis B surface antigen (HBsAg) carrier mothers. A total of 68 babies were followed up for 2 years after the full course of vaccination; 2.9% (2/68) of babies were found to be infected with the variant HBV in spite of preexisting antibody to surface antigen (anti-HBs) at 24 months post immunization. Both infants were positive for HBV-DNA; sequencing results of the "a" determinant region of the surface gene revealed that both babies had point mutations at a different nucleotide position resulting in various amino acid substitutions. In addition, an intriguing variant having an addition-deletion mutation was observed in one of the babies. This is the first report to show the addition-deletion variant of HBV in India. However, the immunological significance of the above HBV variants needs to be further elucidated.