Hydrogen etching is a conventional method used for removing scratches on SiC substrates before epitaxial growth. Silicon droplets usually form on the surface during this process. Formation of droplets can be inhibited by adding a small amount of C3H8 in the H-2 flow. However, addition of C3H8 reduces the etching rate considerably. We have investigated a new method to etch SiC by adding a small amount of O-2 in the H-2 flow to overcome the above problem. Etching experiments under various temperatures and O-2 flow rates are performed. The etched surfaces are examined by optical microscope, AFM and XPS. These experiments show that a small amount of O-2 in H-2 Can increase the etch rate and prevent the formation of Si droplets. It can be used as an in-situ method for cleaning SiC substrates.