In order to improve spectrum efficiency and transmission reliability of the LTE communication system, its terminal users can be divided into the D2D communication cluster. Specially, the multicast transmission of data packets in the LTE system can be realized through two hop transmissions, namely, the base station multicasts data packets to all cluster-heads and each cluster-head in the D2D communication cluster broadcasts the received packets. Considering that the links may be unreliable in the D2D communication cluster, the ARQ retransmission algorithm based on network coding is adopted. By establishing the lost-packet list, the cluster-head operates the lost-packets by network coding, and broadcasts the encoded packets to reduce the number of retransmission. Performance analysis and simulation results show that the proposed scheme can achieve almost the same transmission efficiency as the existing scheme, but has a lower computational complexity. Compared with the traditional multicast retransmission scheme based on network coding in the cellular communication mode, the scheme only retransmits the lost-packets in D2D cluster, to reduce the pachets transmission number of base stations and decrease the spectrum resource consumption of the cellular network effectively at a high packet loss rate.