diff --git a/dropbear.8 b/dropbear.8
index be733726b..ec5aa4025 100644
--- a/dropbear.8
+++ b/dropbear.8
@@ -29,6 +29,9 @@ or automatically with the '-R' option. See "Host Key Files" below.
 .B \-R
 Generate hostkeys automatically. See "Host Key Files" below.
 .TP
+.B \-U \fIauthorized_keys
+Path to file containing authorized user keys inside the user home directory. Defaults to '.ssh/authorized_keys'.
+.TP
 .B \-F
 Don't fork into background.
 .TP
diff --git a/runopts.h b/runopts.h
index cecdc228e..25490c983 100644
--- a/runopts.h
+++ b/runopts.h
@@ -116,6 +116,8 @@ typedef struct svr_runopts {
 
 	char * forced_command;
 
+	char * authkeysfile;
+
 } svr_runopts;
 
 extern svr_runopts svr_opts;
diff --git a/svr-authpubkey.c b/svr-authpubkey.c
index 90d0d2cc9..71b1601eb 100644
--- a/svr-authpubkey.c
+++ b/svr-authpubkey.c
@@ -64,6 +64,7 @@
 #include "ssh.h"
 #include "packet.h"
 #include "algo.h"
+#include "runopts.h"
 
 #if DROPBEAR_SVR_PUBKEY_AUTH
 
@@ -72,7 +73,7 @@
 
 static int checkpubkey(char* algo, unsigned int algolen,
 		unsigned char* keyblob, unsigned int keybloblen);
-static int checkpubkeyperms(void);
+static int checkpubkeyperms(char *filename, char *base);
 static void send_msg_userauth_pk_ok(char* algo, unsigned int algolen,
 		unsigned char* keyblob, unsigned int keybloblen);
 static int checkfileperm(char * filename);
@@ -196,6 +197,7 @@ static int checkpubkey(char* algo, unsigned int algolen,
 
 	FILE * authfile = NULL;
 	char * filename = NULL;
+	char * relfilename = NULL;
 	int ret = DROPBEAR_FAILURE;
 	buffer * line = NULL;
 	unsigned int len, pos;
@@ -212,21 +214,23 @@ static int checkpubkey(char* algo, unsigned int algolen,
 		goto out;
 	}
 
-	/* check file permissions, also whether file exists */
-	if (checkpubkeyperms() == DROPBEAR_FAILURE) {
+	relfilename = ( svr_opts.authkeysfile
+			? svr_opts.authkeysfile
+			: ".ssh/authorized_keys" );
+	if (relfilename[0] == '/') { /* name is absolute */
+		filename = m_strdup(relfilename);
+	}
+	else {
+		len = strlen(ses.authstate.pw_dir) + strlen(relfilename) + 2;
+		filename = m_malloc(len);
+		snprintf(filename, len, "%s/%s", ses.authstate.pw_dir, relfilename);
+	}
+
+	if (checkpubkeyperms(filename, ses.authstate.pw_dir) != DROPBEAR_SUCCESS) {
 		TRACE(("bad authorized_keys permissions, or file doesn't exist"))
 		goto out;
 	}
 
-	/* we don't need to check pw and pw_dir for validity, since
-	 * its been done in checkpubkeyperms. */
-	len = strlen(ses.authstate.pw_dir);
-	/* allocate max required pathname storage,
-	 * = path + "/.ssh/authorized_keys" + '\0' = pathlen + 22 */
-	filename = m_malloc(len + 22);
-	snprintf(filename, len + 22, "%s/.ssh/authorized_keys", 
-				ses.authstate.pw_dir);
-
 	/* open the file */
 	authfile = fopen(filename, "r");
 	if (authfile == NULL) {
@@ -362,52 +366,47 @@ static int checkpubkey(char* algo, unsigned int algolen,
 
 /* Returns DROPBEAR_SUCCESS if file permissions for pubkeys are ok,
  * DROPBEAR_FAILURE otherwise.
- * Checks that the user's homedir, ~/.ssh, and
- * ~/.ssh/authorized_keys are all owned by either root or the user, and are
+ * Checks filename and its parent directories recursively until the
+ * base directory (usually ~/) or one of its ancestors (up to /) is
+ * reached.
+ * The files and directories must be all owned by root or the user, and be
  * g-w, o-w */
-static int checkpubkeyperms() {
-
-	char* filename = NULL; 
+static int checkpubkeyperms(char *filename, char *base) {
+	char* path = NULL;
 	int ret = DROPBEAR_FAILURE;
 	unsigned int len;
 
-	TRACE(("enter checkpubkeyperms"))
+	TRACE(("enter checkpubkeyperms(%s, %s)", filename, base))
 
-	if (ses.authstate.pw_dir == NULL) {
+	if ((base == NULL) || (base[0] != '/') ||
+	    (filename == NULL) || (filename[0] != '/')) {
+		/* both filename and base must be absolute paths */
 		goto out;
 	}
 
-	if ((len = strlen(ses.authstate.pw_dir)) == 0) {
-		goto out;
-	}
-
-	/* allocate max required pathname storage,
-	 * = path + "/.ssh/authorized_keys" + '\0' = pathlen + 22 */
-	filename = m_malloc(len + 22);
-	strncpy(filename, ses.authstate.pw_dir, len+1);
-
-	/* check ~ */
-	if (checkfileperm(filename) != DROPBEAR_SUCCESS) {
-		goto out;
-	}
+	len = strlen(filename);
+	path = m_strdup(filename);
 
-	/* check ~/.ssh */
-	strncat(filename, "/.ssh", 5); /* strlen("/.ssh") == 5 */
-	if (checkfileperm(filename) != DROPBEAR_SUCCESS) {
-		goto out;
-	}
+	while (checkfileperm(len ? path : "/") == DROPBEAR_SUCCESS) {
+		/* check if we are on base trail and if this is the
+		 * case, return success */
+		if ((strncmp(base, path, len) == 0) &&
+		    (!len || (base[len] == '\0') || (base[len] == '/'))) {
+			ret = DROPBEAR_SUCCESS;
+			break;
+		}
 
-	/* now check ~/.ssh/authorized_keys */
-	strncat(filename, "/authorized_keys", 16);
-	if (checkfileperm(filename) != DROPBEAR_SUCCESS) {
-		goto out;
+		/* look for parent directory */
+		while (--len) {
+			if (path[len] == '/') {
+				path[len] = '\0';
+				break;
+			}
+		}
 	}
 
-	/* file looks ok, return success */
-	ret = DROPBEAR_SUCCESS;
-	
 out:
-	m_free(filename);
+	m_free(path);
 
 	TRACE(("leave checkpubkeyperms"))
 	return ret;
@@ -433,7 +432,8 @@ static int checkfileperm(char * filename) {
 		TRACE(("wrong ownership"))
 	}
 	/* check permissions - don't want group or others +w */
-	if (filestat.st_mode & (S_IWGRP | S_IWOTH)) {
+	if ((filestat.st_mode & (S_IWGRP | S_IWOTH)) &&
+	    !(S_ISDIR(filestat.st_mode) && (filestat.st_mode & S_ISVTX))) {
 		badperm = 1;
 		TRACE(("wrong perms"))
 	}
diff --git a/svr-runopts.c b/svr-runopts.c
index e6dc8a8fd..0c980cdd8 100644
--- a/svr-runopts.c
+++ b/svr-runopts.c
@@ -120,6 +120,7 @@ void svr_getopts(int argc, char ** argv) {
 	char* keepalive_arg = NULL;
 	char* idle_timeout_arg = NULL;
 	char* keyfile = NULL;
+	char* authkeysfile = NULL;
 	char c;
 
 
@@ -137,6 +138,8 @@ void svr_getopts(int argc, char ** argv) {
 	svr_opts.hostkey = NULL;
 	svr_opts.delay_hostkey = 0;
 	svr_opts.pidfile = DROPBEAR_PIDFILE;
+	svr_opts.authkeysfile = NULL;
+
 #if DROPBEAR_SVR_LOCALTCPFWD
 	svr_opts.nolocaltcp = 0;
 #endif
@@ -253,6 +256,9 @@ void svr_getopts(int argc, char ** argv) {
 				case 'u':
 					/* backwards compatibility with old urandom option */
 					break;
+				case 'U':
+					next = &authkeysfile;
+					break;
 #if DEBUG_TRACE
 				case 'v':
 					debug_trace = 1;
@@ -295,6 +301,10 @@ void svr_getopts(int argc, char ** argv) {
 				addhostkey(keyfile);
 				keyfile = NULL;
 			}
+			if (authkeysfile) {
+				svr_opts.authkeysfile = m_strdup(authkeysfile);
+				authkeysfile = NULL;
+			}
 		}
 	}