diff --git a/litellm/llms/huggingface_restapi.py b/litellm/llms/huggingface_restapi.py
index 205bad7ee..61a6ac040 100644
--- a/litellm/llms/huggingface_restapi.py
+++ b/litellm/llms/huggingface_restapi.py
@@ -634,15 +634,60 @@ class Huggingface(BaseLLM):
                         status_code=r.status_code,
                         message=str(text),
                     )
-                streamwrapper = CustomStreamWrapper(
-                    completion_stream=r.aiter_lines(),
+                """
+                Check first chunk for error message. 
+                If error message, raise error. 
+                If not - add back to stream
+                """
+                # Async iterator over the lines in the response body
+                response_iterator = r.aiter_lines()
+
+                # Attempt to get the first line/chunk from the response
+                try:
+                    first_chunk = await response_iterator.__anext__()
+                except StopAsyncIteration:
+                    # Handle the case where there are no lines to read (empty response)
+                    first_chunk = ""
+
+                # Check the first chunk for an error message
+                if (
+                    "error" in first_chunk.lower()
+                ):  # Adjust this condition based on how error messages are structured
+                    raise HuggingfaceError(
+                        status_code=400,
+                        message=first_chunk,
+                    )
+
+                return self.async_streaming_generator(
+                    first_chunk=first_chunk,
+                    response_iterator=response_iterator,
                     model=model,
-                    custom_llm_provider="huggingface",
                     logging_obj=logging_obj,
                 )
 
-                async for transformed_chunk in streamwrapper:
-                    yield transformed_chunk
+    async def async_streaming_generator(
+        self, first_chunk, response_iterator, model, logging_obj
+    ):
+        # Create a new async generator that begins with the first_chunk and includes the remaining items
+        async def custom_stream_with_first_chunk():
+            yield first_chunk  # Yield back the first chunk
+            async for (
+                chunk
+            ) in response_iterator:  # Continue yielding the rest of the chunks
+                yield chunk
+
+        # Creating a new completion stream that starts with the first chunk
+        completion_stream = custom_stream_with_first_chunk()
+
+        streamwrapper = CustomStreamWrapper(
+            completion_stream=completion_stream,
+            model=model,
+            custom_llm_provider="huggingface",
+            logging_obj=logging_obj,
+        )
+
+        async for transformed_chunk in streamwrapper:
+            yield transformed_chunk
 
     def embedding(
         self,
diff --git a/litellm/proxy/proxy_server.py b/litellm/proxy/proxy_server.py
index f1dec3881..7dbb068bc 100644
--- a/litellm/proxy/proxy_server.py
+++ b/litellm/proxy/proxy_server.py
@@ -167,6 +167,15 @@ class ProxyException(Exception):
         self.param = param
         self.code = code
 
+    def to_dict(self) -> dict:
+        """Converts the ProxyException instance to a dictionary."""
+        return {
+            "message": self.message,
+            "type": self.type,
+            "param": self.param,
+            "code": self.code,
+        }
+
 
 @app.exception_handler(ProxyException)
 async def openai_exception_handler(request: Request, exc: ProxyException):
@@ -2241,12 +2250,14 @@ async def async_data_generator(response, user_api_key_dict):
             error_traceback = traceback.format_exc()
             error_msg = f"{str(e)}\n\n{error_traceback}"
 
-        raise ProxyException(
+        proxy_exception = ProxyException(
             message=getattr(e, "message", error_msg),
             type=getattr(e, "type", "None"),
             param=getattr(e, "param", "None"),
             code=getattr(e, "status_code", 500),
         )
+        error_returned = json.dumps({"error": proxy_exception.to_dict()})
+        yield f"data: {error_returned}\n\n"
 
 
 def select_data_generator(response, user_api_key_dict):
diff --git a/litellm/utils.py b/litellm/utils.py
index 53e6e8245..233fd6bae 100644
--- a/litellm/utils.py
+++ b/litellm/utils.py
@@ -8117,7 +8117,8 @@ class CustomStreamWrapper:
                     text = ""  # don't return the final bos token
                     is_finished = True
                     finish_reason = "stop"
-
+                elif data_json.get("error", False):
+                    raise Exception(data_json.get("error"))
                 return {
                     "text": text,
                     "is_finished": is_finished,
@@ -8132,7 +8133,7 @@ class CustomStreamWrapper:
             }
         except Exception as e:
             traceback.print_exc()
-            # raise(e)
+            raise e
 
     def handle_ai21_chunk(self, chunk):  # fake streaming
         chunk = chunk.decode("utf-8")