Network optimization or network design with an embedded traffic assignment (TA) to model user equilibrium principle, sometimes expressed as bilevel problems or mathematical programs with equilibrium constraints (MPEC), is at the heart of transportation planning and operations. For applications to large-scale multimodal networks with high dimensional decision variables, the problem is nontrivial, to say the least. General-purpose algorithms and problem-specific bilevel formulations have been proposed in the past to solve small problems for demonstration purposes. Research gap, however, exists in developing efficient solution methods for large-scale problems in both static and dynamic contexts. This paper proposes an efficient gradient estimation method called Iterative Backpropagation (IB) for network optimization problems with an embedded static TA model. IB exploits the iterative structure of the TA solution procedure and simultaneously calculates the gradients while the TA process converges. IB does not require any additional function evaluation and consequently scales very well with higher dimensions. We apply the proposed approach to origin-destination (OD) estimation, an MPEC problem, of the Hong Kong multimodal network with 49,806 decision variables, 8,797 nodes, 18,207 links, 2,684 transit routes, and 165,509 OD pairs. The calibrated model performs well in matching the link counts. Specifically, the IB-gradient based optimization technique reduces the link volume squared error by 98%, mean absolute percentage error (MAPE) from 95.29% to 21.23%, and the average GEH statistics from 24.18 to 6.09 compared with the noncalibrated case. The framework, even though applied to OD estimation in this paper, is applicable to a wide variety of optimization problems with an embedded TA model, opening up an efficient way to solve large-scale MPEC or bilevel problems. Funding: The study is supported by IVADO Postdoctoral Fellowship scheme 2021, HSBC 150th Anniversary Charity Programme HKBF17RG01, National Science Foundation of China (71890970, 71890974), General Research Fund (16212819, 16207920) of the HKSAR Government, and the Hong Kong PhD Fellowship.