diff --git a/INSTALL b/INSTALL
index 921477209..00ba6633a 100644
--- a/INSTALL
+++ b/INSTALL
@@ -1,14 +1,50 @@
+Building:
+=========
+
+You will usually build in the source-tree.
+
+Alternatively you can build out-of-tree to have the object files separated
+from the source. This allows for building several different configurations
+from the same set of sources.
+
+A) Building in the source-tree:
+-------------------------------
+
 1) Run 'make config' or 'make menuconfig' and select the
    functionality that you wish to enable.
 
 2) Run 'make'
 
-3) Go get a drink of water, drink a soda, visit the bathroom,
-    or whatever while it compiles.  It doesn't take very
-    long to compile, so you don't really need to waste too
-    much time waiting...
-
-4) Run 'make install' or 'make PREFIX=/target install' to
+3) Run 'make install' or 'make PREFIX=/target install' to
     install busybox and all the needed links.  Some people
     will prefer to install using hardlinks and will instead
     want to run 'make install-hardlinks'....
+
+B) Building out-of-tree:
+------------------------
+
+1) make the directory to hold the object files and chdir to it:
+   'mkdir /tmp/bb ; cd /tmp/bb'
+   Then prepare the config giving the full path to the source in top_srcdir:
+   make top_srcdir=/path/busybox -f /path/busybox/Makefile O=/tmp/b allyesconfig
+ 
+   Note that O=$(pwd) is the default if no O= was specified.
+
+   You now have a buildable tree in $O and can run 'make' without the need
+   to specify any paths.
+
+   Proceed with step #A2 above.
+
+
+Installation:
+=============
+
+After the build is complete, a busybox.links file is generated.  This is
+used by 'make install' to create symlinks to the BusyBox binary for all
+compiled in functions.  By default, 'make install' will place the symlink
+forest into `pwd`/_install unless you have defined the PREFIX environment
+variable (i.e., 'make PREFIX=/tmp/foo install')
+
+If you wish to install hard links, rather than symlinks, you can use
+'make PREFIX=/tmp/foo install-hardlinks' instead.
+
diff --git a/Makefile b/Makefile
index f71c53694..7f29037f5 100644
--- a/Makefile
+++ b/Makefile
@@ -24,8 +24,6 @@ endif
 export srctree=$(top_srcdir)
 vpath %/Config.in $(srctree)
 
-include $(top_srcdir)/Rules.mak
-
 DIRS:=applets archival archival/libunarchive coreutils console-tools \
 	debianutils editors findutils init miscutils modutils networking \
 	networking/libiproute networking/udhcp procps loginutils shell \
@@ -33,28 +31,36 @@ DIRS:=applets archival archival/libunarchive coreutils console-tools \
 
 SRC_DIRS:=$(patsubst %,$(top_srcdir)/%,$(DIRS))
 
-ifeq ($(strip $(CONFIG_SELINUX)),y)
-LIBRARIES += -lselinux
-endif
+# That's our default target when none is given on the command line
+.PHONY: _all
+_all:
+
+# All object directories.
+OBJ_DIRS = scripts/config include $(DIRS)
+$(OBJ_DIRS):
+	mkdir -p "$(patsubst %,$(top_builddir)/%,$@)"
+
+scripts/config/Makefile: $(top_srcdir)/scripts/config/Makefile
+	cp -v $< $@
+
+include $(top_srcdir)/Rules.mak
 
 CONFIG_CONFIG_IN = $(top_srcdir)/sysdeps/$(TARGET_OS)/Config.in
 CONFIG_DEFCONFIG = $(top_srcdir)/sysdeps/$(TARGET_OS)/defconfig
 
-ALL_DIRS:= $(DIRS) scripts/config
-ALL_MAKEFILES:=$(patsubst %,%/Makefile,$(ALL_DIRS))
-
 ifeq ($(KBUILD_SRC),)
 
 ifdef O
   ifeq ("$(origin O)", "command line")
     KBUILD_OUTPUT := $(O)
   endif
+else
+# If no alternate output-dir was specified, we build in cwd
+# We are using KBUILD_OUTPUT nevertheless to make sure that we create
+# Rules.mak and the toplevel Makefile, in case they don't exist.
+  KBUILD_OUTPUT := $(top_builddir)
 endif
 
-# That's our default target when none is given on the command line
-.PHONY: _all
-_all:
-
 ifneq ($(KBUILD_OUTPUT),)
 # Invoke a second make in the output directory, passing relevant variables
 # check that the output directory actually exists
@@ -63,24 +69,29 @@ KBUILD_OUTPUT := $(shell cd $(KBUILD_OUTPUT) && /bin/pwd)
 $(if $(wildcard $(KBUILD_OUTPUT)),, \
      $(error output directory "$(saved-output)" does not exist))
 
+# We only need a copy of the Makefile for the config targets and reuse
+# the rest from the source directory, i.e. we do not cp ALL_MAKEFILES.
+all_tree: $(OBJ_DIRS) $(KBUILD_OUTPUT)/Rules.mak $(KBUILD_OUTPUT)/Makefile scripts/config/Makefile
+
 .PHONY: $(MAKECMDGOALS)
 
-$(filter-out _all,$(MAKECMDGOALS)) _all: $(KBUILD_OUTPUT)/Rules.mak $(KBUILD_OUTPUT)/Makefile
+$(filter-out _all,$(MAKECMDGOALS)) _all: $(KBUILD_OUTPUT)/Rules.mak $(KBUILD_OUTPUT)/Makefile all_tree
+#all:
 	$(MAKE) -C $(KBUILD_OUTPUT) \
-	top_srcdir=$(CURDIR) \
-	top_builddir=$(KBUILD_OUTPUT) \
-	KBUILD_SRC=$(CURDIR) \
+	top_srcdir=$(top_srcdir) \
+	top_builddir=$(top_builddir) \
+	KBUILD_SRC=$(top_srcdir) \
 	-f $(CURDIR)/Makefile $@
 
 $(KBUILD_OUTPUT)/Rules.mak:
 	@echo > $@
-	@echo top_srcdir=$(CURDIR) >> $@
+	@echo top_srcdir=$(top_srcdir) >> $@
 	@echo top_builddir=$(KBUILD_OUTPUT) >> $@
 	@echo include $(top_srcdir)/Rules.mak >> $@
 
 $(KBUILD_OUTPUT)/Makefile:
 	@echo > $@
-	@echo top_srcdir=$(CURDIR) >> $@
+	@echo top_srcdir=$(top_srcdir) >> $@
 	@echo top_builddir=$(KBUILD_OUTPUT) >> $@
 	@echo KBUILD_SRC='$$(top_srcdir)' >> $@
 	@echo include '$$(KBUILD_SRC)'/Makefile >> $@
@@ -124,21 +135,61 @@ help:
 	@echo '  sizes			- show size of all enabled busybox symbols'
 	@echo
 
-ifeq ($(strip $(HAVE_DOT_CONFIG)),y)
+
+ifneq ($(strip $(HAVE_DOT_CONFIG)),y)
+
+all: menuconfig
+
+# configuration
+# ---------------------------------------------------------------------------
+
+scripts/config/conf: scripts/config/Makefile
+	$(MAKE) -C scripts/config conf
+	-@if [ ! -f .config ] ; then \
+		cp $(CONFIG_DEFCONFIG) .config; \
+	fi
+
+scripts/config/mconf: scripts/config/Makefile
+	$(MAKE) -C scripts/config ncurses conf mconf
+	-@if [ ! -f .config ] ; then \
+		cp $(CONFIG_DEFCONFIG) .config; \
+	fi
+
+menuconfig: scripts/config/mconf
+	@./scripts/config/mconf $(CONFIG_CONFIG_IN)
+
+config: scripts/config/conf
+	@./scripts/config/conf $(CONFIG_CONFIG_IN)
+
+oldconfig: scripts/config/conf
+	@./scripts/config/conf -o $(CONFIG_CONFIG_IN)
+
+randconfig: scripts/config/conf
+	@./scripts/config/conf -r $(CONFIG_CONFIG_IN)
+
+allyesconfig: scripts/config/conf
+	@./scripts/config/conf -y $(CONFIG_CONFIG_IN)
+	sed -i -r -e "s/^(CONFIG_DEBUG|USING_CROSS_COMPILER|CONFIG_STATIC|CONFIG_SELINUX).*/# \1 is not set/" .config
+	@./scripts/config/conf -o $(CONFIG_CONFIG_IN)
+
+allnoconfig: scripts/config/conf
+	@./scripts/config/conf -n $(CONFIG_CONFIG_IN)
+
+defconfig: scripts/config/conf
+	@./scripts/config/conf -d $(CONFIG_CONFIG_IN)
+
+else # ifneq ($(strip $(HAVE_DOT_CONFIG)),y)
 
 all: busybox busybox.links doc
 
-all_tree:       $(ALL_MAKEFILES)
-
-$(ALL_MAKEFILES): %/Makefile: $(top_srcdir)/%/Makefile
-	[ -d $(@D) ] || mkdir -p $(@D); cp $< $@
-
 # In this section, we need .config
 -include $(top_builddir)/.config.cmd
 include $(patsubst %,%/Makefile.in, $(SRC_DIRS))
 -include $(top_builddir)/.depend
 
-busybox: $(ALL_MAKEFILES) .depend $(libraries-y)
+endif # ifneq ($(strip $(HAVE_DOT_CONFIG)),y)
+
+busybox: .depend $(libraries-y)
 	$(CC) $(EXTRA_CFLAGS) $(LDFLAGS) -o $@ -Wl,--start-group $(libraries-y) $(LIBRARIES) -Wl,--end-group
 	$(STRIPCMD) $@
 
@@ -217,7 +268,7 @@ ifeq ($(strip $(CONFIG_BBCONFIG)),y)
 DEP_INCLUDES += include/bbconfigopts.h
 
 include/bbconfigopts.h: .config
-	scripts/config/mkconfigs > $@
+	$(top_srcdir)/scripts/config/mkconfigs > $@
 endif
 
 depend dep $(top_builddir)/.depend: .depend
@@ -245,48 +296,6 @@ finished2:
 	$(SECHO) Finished installing...
 	$(SECHO)
 
-else # ifeq ($(strip $(HAVE_DOT_CONFIG)),y)
-
-all: menuconfig
-
-# configuration
-# ---------------------------------------------------------------------------
-
-scripts/config/conf: scripts/config/Makefile $(top_srcdir)/Rules.mak
-	$(MAKE) -C scripts/config conf
-	-@if [ ! -f .config ] ; then \
-		cp $(CONFIG_DEFCONFIG) .config; \
-	fi
-
-scripts/config/mconf: scripts/config/Makefile $(top_srcdir)/Rules.mak
-	$(MAKE) -C scripts/config ncurses conf mconf
-	-@if [ ! -f .config ] ; then \
-		cp $(CONFIG_DEFCONFIG) .config; \
-	fi
-
-menuconfig: scripts/config/mconf
-	@./scripts/config/mconf $(CONFIG_CONFIG_IN)
-
-config: scripts/config/conf
-	@./scripts/config/conf $(CONFIG_CONFIG_IN)
-
-oldconfig: scripts/config/conf
-	@./scripts/config/conf -o $(CONFIG_CONFIG_IN)
-
-randconfig: scripts/config/conf
-	@./scripts/config/conf -r $(CONFIG_CONFIG_IN)
-
-allyesconfig: scripts/config/conf
-	@./scripts/config/conf -y $(CONFIG_CONFIG_IN)
-	sed -i -r -e "s/^(CONFIG_DEBUG|USING_CROSS_COMPILER|CONFIG_STATIC|CONFIG_SELINUX).*/# \1 is not set/" .config
-	@./scripts/config/conf -o $(CONFIG_CONFIG_IN)
-
-allnoconfig: scripts/config/conf
-	@./scripts/config/conf -n $(CONFIG_CONFIG_IN)
-
-defconfig: scripts/config/conf
-	@./scripts/config/conf -d $(CONFIG_CONFIG_IN)
-
 clean:
 	- $(MAKE) -C scripts/config $@
 	- rm -f docs/busybox.dvi docs/busybox.ps \
@@ -327,8 +336,6 @@ tags:
 	ctags -R .
 
 
-endif # ifeq ($(strip $(HAVE_DOT_CONFIG)),y)
-
 endif # ifeq ($(skip-makefile),)
 
 .PHONY: dummy subdirs release distclean clean config oldconfig \
diff --git a/README b/README
index bf2ae6f3f..d9bac59cf 100644
--- a/README
+++ b/README
@@ -1,4 +1,5 @@
 Please see the LICENSE file for details on copying and usage.
+Please refer to the INSTALL file for instructions on how to build.
 
 BusyBox combines tiny versions of many common UNIX utilities into a single
 small executable. It provides minimalist replacements for most of the utilities
@@ -15,17 +16,8 @@ BusyBox provides a fairly complete POSIX environment for any small or embedded
 system.
 
 BusyBox is extremely configurable.  This allows you to include only the
-components you need, thereby reducing binary size. Run 'make config' or
-'make menuconfig' to select the functionality that you wish to enable.
-
-After the build is complete, a busybox.links file is generated.  This is
-used by 'make install' to create symlinks to the BusyBox binary for all
-compiled in functions.  By default, 'make install' will place the symlink
-forest into `pwd`/_install unless you have defined the PREFIX environment
-variable (i.e., 'make PREFIX=/tmp/foo install')
-
-If you wish to install hard links, rather than symlinks, you can use
-'make PREFIX=/tmp/foo install-hardlinks' instead.
+components you need, thereby reducing binary size. See the file INSTALL
+for details.
 
 ----------------
 
@@ -110,14 +102,14 @@ be downloaded from
 
 CVS:
 
-BusyBox now has its own publicly browsable CVS tree at:
-    http://busybox.net/cgi-bin/cvsweb/busybox/
+BusyBox now has its own publicly browsable SVN tree at:
+    http://busybox.net/cgi-bin/viewcvs.cgi/trunk/busybox/
 
-Anonymous CVS access is available.  For instructions, check out:
-    http://busybox.net/cvs_anon.html
+Anonymous SVN access is available.  For instructions, check out:
+    http://busybox.net/subversion.html
 
-For those that are actively contributing there is even CVS write access:
-    http://busybox.net/cvs_write.html
+For those that are actively contributing there is even SVN write access:
+    http://busybox.net/developer.html
 
 ----------------
 
diff --git a/Rules.mak b/Rules.mak
index b18d09b96..1e519fbf1 100644
--- a/Rules.mak
+++ b/Rules.mak
@@ -27,7 +27,7 @@ BUILDTIME := $(shell TZ=UTC date -u "+%Y.%m.%d-%H:%M%z")
 # With a modern GNU make(1) (highly recommended, that's what all the
 # developers use), all of the following configuration values can be
 # overridden at the command line.  For example:
-#   make CROSS=powerpc-linux- BB_SRC_DIR=$HOME/busybox PREFIX=/mnt/app
+#   make CROSS=powerpc-linux- top_srcdir="$HOME/busybox" PREFIX=/mnt/app
 #--------------------------------------------------------
 
 # If you are running a cross compiler, you will want to set 'CROSS'
@@ -60,11 +60,6 @@ LC_ALL:= C
 # For optimization overrides, it's better still to set OPTIMIZATION.
 CFLAGS_EXTRA=$(subst ",, $(strip $(EXTRA_CFLAGS_OPTIONS)))
 
-# If you have a "pristine" source directory, point BB_SRC_DIR to it.
-# Experimental and incomplete; tell the mailing list
-# <busybox@busybox.net> if you do or don't like it so far.
-BB_SRC_DIR=
-
 # To compile vs some other alternative libc, you may need to use/adjust
 # the following lines to meet your needs...
 #
@@ -176,19 +171,20 @@ ifeq ($(strip $(CONFIG_STATIC)),y)
     LDFLAGS += --static
 endif
 
+ifeq ($(strip $(CONFIG_SELINUX)),y)
+    LIBRARIES += -lselinux
+endif
+
 ifeq ($(strip $(PREFIX)),)
     PREFIX:=`pwd`/_install
 endif
 
 # Additional complications due to support for pristine source dir.
 # Include files in the build directory should take precedence over
-# the copy in BB_SRC_DIR, both during the compilation phase and the
+# the copy in top_srcdir, both during the compilation phase and the
 # shell script that finds the list of object files.
 # Work in progress by <ldoolitt@recycle.lbl.gov>.
-#
-ifneq ($(strip $(BB_SRC_DIR)),)
-    VPATH:=$(BB_SRC_DIR)
-endif
+
 
 OBJECTS:=$(APPLET_SOURCES:.c=.o) busybox.o usage.o applets.o
 CFLAGS    += $(CROSS_CFLAGS)
diff --git a/e2fsprogs/Makefile b/e2fsprogs/Makefile
index a4b0b785f..e6299e6dd 100644
--- a/e2fsprogs/Makefile
+++ b/e2fsprogs/Makefile
@@ -8,8 +8,8 @@ top_srcdir=..
 top_builddir=..
 srcdir=$(top_srcdir)/e2fsprogs
 E2FSPROGS_DIR:=./
-include $(top_builddir)/Rules.mak
 include $(top_builddir)/.config
+include $(top_builddir)/Rules.mak
 include Makefile.in
 all: $(libraries-y)
 -include $(top_builddir)/.depend
diff --git a/e2fsprogs/Makefile.in b/e2fsprogs/Makefile.in
index 0353a161f..46a684ee7 100644
--- a/e2fsprogs/Makefile.in
+++ b/e2fsprogs/Makefile.in
@@ -39,7 +39,18 @@ UUID_SRC    := compare.c gen_uuid.c pack.c parse.c unpack.c unparse.c \
 UUID_SRCS   := $(patsubst %,uuid/%, $(UUID_SRC))
 UUID_OBJS   := $(patsubst %.c,%.o, $(UUID_SRCS))
 
-E2FSPROGS-:=
+# for building out-of-tree we need to make sure that the directories to hold
+# the object tree are created
+$(patsubst %,$(E2FSPROGS_DIR)/%, blkid e2fsck e2p ext2fs uuid):
+	mkdir -p "$@"
+
+$(patsubst %,$(E2FSPROGS_DIR)/%, $(BLKID_OBJS)):$(E2FSPROGS_DIR)/blkid
+$(patsubst %,$(E2FSPROGS_DIR)/%, $(E2FSCK_OBJS)):$(E2FSPROGS_DIR)/e2fsck
+$(patsubst %,$(E2FSPROGS_DIR)/%, $(E2P_OBJS)):$(E2FSPROGS_DIR)/e2p
+$(patsubst %,$(E2FSPROGS_DIR)/%, $(EXT2FS_OBJS)):$(E2FSPROGS_DIR)/ext2fs
+$(patsubst %,$(E2FSPROGS_DIR)/%, $(UUID_OBJS)):$(E2FSPROGS_DIR)/uuid
+
+E2FSPROGS-y:=
 E2FSPROGS-$(CONFIG_CHATTR)     += chattr.o $(E2P_OBJS)
 E2FSPROGS-$(CONFIG_E2FSCK)     += e2fsck.o util.o $(BLKID_OBJS) $(EXT2FS_OBJS) $(UUID_OBJS)
 E2FSPROGS-$(CONFIG_FSCK)       += fsck.o base_device.o $(BLKID_OBJS) $(UUID_OBJS)
@@ -53,5 +64,6 @@ libraries-y+=$(E2FSPROGS_DIR)/$(E2FSPROGS_AR)
 $(E2FSPROGS_DIR)/$(E2FSPROGS_AR): $(patsubst %,$(E2FSPROGS_DIR)/%, $(E2FSPROGS-y))
 	$(AR) $(ARFLAGS) $@ $(patsubst %,$(E2FSPROGS_DIR)/%, $(E2FSPROGS-y))
 
-$(E2FSPROGS_DIR)/%.o: $(E2FSPROGS_DIR)/%.c
+$(E2FSPROGS_DIR)/%.o: $(subst $(top_builddir),$(top_srcdir),$(E2FSPROGS_DIR)/%.c)
 	$(CC) $(CFLAGS) $(EXTRA_CFLAGS) $(E2FSPROGS_CFLAGS) -c -o $@ $<
+