  We discuss a new algorithm to generate multi-scale initial conditions with
multiple levels of refinements for cosmological "zoom-in" simulations. The
method uses an adaptive convolution of Gaussian white noise with a real space
transfer function kernel together with an adaptive multi-grid Poisson solver to
generate displacements and velocities following first (1LPT) or second order
Lagrangian perturbation theory (2LPT). The new algorithm achieves RMS relative
errors of order 10^(-4) for displacements and velocities in the refinement
region and thus improves in terms of errors by about two orders of magnitude
over previous approaches. In addition, errors are localized at coarse-fine
boundaries and do not suffer from Fourier-space induced interference ringing.
An optional hybrid multi-grid and Fast Fourier Transform (FFT) based scheme is
introduced which has identical Fourier space behaviour as traditional
approaches. Using a suite of re-simulations of a galaxy cluster halo our real
space based approach is found to reproduce correlation functions, density
profiles, key halo properties and subhalo abundances with per cent level
accuracy. Finally, we generalize our approach for two-component baryon and
dark-matter simulations and demonstrate that the power spectrum evolution is in
excellent agreement with linear perturbation theory. For initial baryon density
fields, it is suggested to use the local Lagrangian approximation in order to
generate a density field for mesh based codes that is consistent with
Lagrangian perturbation theory instead of the current practice of using the
Eulerian linearly scaled densities.
