diff --git a/networking/httpd_ssi.c b/networking/httpd_ssi.c
index 86f341f..03f2633 100644
--- a/networking/httpd_ssi.c
+++ b/networking/httpd_ssi.c
@@ -31,13 +31,17 @@
 */
 
 /* Size (i386, static uclibc, approximate):
-   text    data     bss     dec     hex filename
-   8931     164   68552   77647   12f4f httpd_ssi
-*/
+ * text    data     bss     dec     hex filename
+ * 9487     160   68552   78199   13177 httpd_ssi
+ *
+ * Note: it wouldn't be too hard to get rid of stdio and strdup,
+ * (especially that fgets() mangles NULs...)
+ */
 
 #include <sys/types.h>
 #include <sys/stat.h>
 #include <errno.h>
+#include <fcntl.h>
 #include <stdint.h>
 #include <stdlib.h>
 #include <string.h>
@@ -46,40 +50,97 @@
 #include <dirent.h>
 #include <time.h>
 
+static char* skip_whitespace(char *s)
+{
+        while (*s == ' ' || *s == '\t') ++s;
+
+        return s;
+}
+
 static char line[64 * 1024];
 
-/*
- * Currently only handles directives which are alone on the line
- */
 static void process_includes(const char *filename)
 {
+	int curdir_fd;
+	char *end;
 	FILE *fp = fopen(filename, "r");
 	if (!fp)
 		exit(1);
 
-#define INCLUDE "<!--#include file=\""
-	while (fgets(line, sizeof(line), fp)) {
-		char *closing_dq;
+	/* Ensure that nested includes are relative:
+	 * if we include a/1.htm and it includes b/2.htm,
+	 * we need to include a/b/2.htm, not b/2.htm
+	 */
+	curdir_fd = -1;
+	end = strrchr(filename, '/');
+	if (end) {
+		curdir_fd = open(".", O_RDONLY);
+		/* *end = '\0' would mishandle "/file.htm" */
+		end[1] = '\0';
+		chdir(filename);
+	}
 
-		/* FIXME: output text leading to INCLUDE first */
-		if (strncmp(line, INCLUDE, sizeof(INCLUDE)-1) != 0
-		 || (closing_dq = strchr(line + sizeof(INCLUDE)-1, '"')) == NULL
-		/* or strstr(line + sizeof(INCLUDE)-1, "\" -->")? */
-		) {
+#define INCLUDE "<!--#include"
+	while (fgets(line, sizeof(line), fp)) {
+		unsigned preceding_len;
+		char *include_directive;
+
+		include_directive = strstr(line, INCLUDE);
+		if (!include_directive) {
 			fputs(line, stdout);
 			continue;
 		}
-		*closing_dq = '\0';
+		preceding_len = include_directive - line;
+		if (memchr(line, '\"', preceding_len)
+		 || memchr(line, '\'', preceding_len)
+		) {
+			/* INCLUDE string may be inside "str" or 'str',
+			 * ignore it */
+			fputs(line, stdout);
+			continue;
+		}
+		/* Small bug: we accept #includefile="file" too */
+		include_directive = skip_whitespace(include_directive + sizeof(INCLUDE)-1);
+		if (strncmp(include_directive, "file=\"", 6) != 0) {
+			/* "<!--#include virtual=..."? - not supported */
+			fputs(line, stdout);
+			continue;
+		}
+		include_directive += 6; /* now it points to file name */
+		end = strchr(include_directive, '\"');
+		if (!end) {
+			fputs(line, stdout);
+			continue;
+		}
+		/* We checked that this is a valid include directive */
+
+		/* Print everything before directive */
+		if (preceding_len) {
+			line[preceding_len] = '\0';
+			fputs(line, stdout);
+		}
+		/* Save everything after directive */
+		*end++ = '\0';
+		end = strchr(end, '>');
+		if (end)
+			end = strdup(end + 1);
+
 		/* FIXME:
 		 * (1) are relative paths with /../ etc ok?
-		 * (2) if we include a/1.htm and it includes b/2.htm,
-		 * do we need to include a/b/2.htm or b/2.htm?
-		 * IOW, do we need to "cd $dirname"?
+		 * (2) what to do with absolute paths?
+		 * are they relative to doc root or to real root?
 		 */
-		process_includes(line + sizeof(INCLUDE)-1);
-		/* FIXME: this should be the tail of line after --> */
-		putchar('\n');
+		process_includes(include_directive);
+
+		/* Print everything after directive */
+	        if (end) {
+			fputs(end, stdout);
+			free(end);
+		}
 	}
+	if (curdir_fd >= 0)
+		fchdir(curdir_fd);
+	fclose(fp);
 }
 
 int main(int argc, char *argv[])
@@ -95,13 +156,14 @@
 	 * Connection: close
 	 * Content-Type: text/html
 	 */
-	printf(
+	fputs(
 		/* "Date: Thu, 10 Sep 2009 18:23:28 GMT\r\n" */
 		/* "Server: Apache\r\n" */
 		/* "Accept-Ranges: bytes\r\n" - do we really accept bytes?! */
 		"Connection: close\r\n"
 		"Content-Type: text/html\r\n"
-		"\r\n"
+		"\r\n",
+		stdout
 	);
 	process_includes(argv[1]);
 	return 0;