diff --git a/build/org.eclipse.cdt.managedbuilder.core.tests/plugin.xml b/build/org.eclipse.cdt.managedbuilder.core.tests/plugin.xml
index dc00361aaa6..0e896fce1d2 100644
--- a/build/org.eclipse.cdt.managedbuilder.core.tests/plugin.xml
+++ b/build/org.eclipse.cdt.managedbuilder.core.tests/plugin.xml
@@ -38,7 +38,7 @@
                name="String in Free"
                category="indy.cat.free"
                valueType="string"
-               id="org.eclipse.cdt.core.tests.option1">
+               id="indy.cat.free.string">
          </option>
          <optionCategory
                owner="indy.cat.free"
@@ -50,7 +50,7 @@
                name="Boolean in Chained"
                category="indy.cat.chained"
                valueType="boolean"
-               id="org.eclipse.cdt.core.tests.option2">
+               id="indy.cat.chained.boolean">
          </option>
       </tool>
       <target
@@ -293,7 +293,13 @@
             id="test.sub.sub">
          <toolReference
                id="target.independent.tool">
+            <optionReference
+                  defaultValue="true"
+                  id="indy.cat.chained.boolean"/>
          </toolReference>
+         <configuration
+               name="Sub Sub Config"
+               id="sub.sub.config"/>
       </target>
       <dynamicElementProvider
             name="Test Target Provider"
diff --git a/build/org.eclipse.cdt.managedbuilder.core.tests/tests/org/eclipse/cdt/managedbuild/core/tests/ManagedBuildCoreTests.java b/build/org.eclipse.cdt.managedbuilder.core.tests/tests/org/eclipse/cdt/managedbuild/core/tests/ManagedBuildCoreTests.java
index 02bd28a0d42..cee7f06fb31 100644
--- a/build/org.eclipse.cdt.managedbuilder.core.tests/tests/org/eclipse/cdt/managedbuild/core/tests/ManagedBuildCoreTests.java
+++ b/build/org.eclipse.cdt.managedbuilder.core.tests/tests/org/eclipse/cdt/managedbuild/core/tests/ManagedBuildCoreTests.java
@@ -45,7 +45,9 @@ import org.eclipse.cdt.managedbuilder.core.ITool;
 import org.eclipse.cdt.managedbuilder.core.IToolReference;
 import org.eclipse.cdt.managedbuilder.core.ManagedBuildManager;
 import org.eclipse.cdt.managedbuilder.core.ManagedCProjectNature;
+import org.eclipse.cdt.managedbuilder.internal.core.Option;
 import org.eclipse.cdt.managedbuilder.internal.core.OptionReference;
+import org.eclipse.cdt.managedbuilder.internal.core.ToolReference;
 import org.eclipse.core.resources.IFile;
 import org.eclipse.core.resources.IFolder;
 import org.eclipse.core.resources.IProject;
@@ -1052,6 +1054,24 @@ public class ManagedBuildCoreTests extends TestCase {
 	}
 
 	/*
+	 * The Sub Sub target has a reference to a tool that is defined  
+	 * independently from the target itself. This is a common pattern 
+	 * for tools that are shared between many targets.
+	 * 
+	 * The tool itself is defined as having two option categories, with 
+	 * one option in each category. To test that the reference is properly 
+	 * inheritted, the target overrides the default value of the boolean 
+	 * option. 
+	 * 
+	 * The test confirms that the basic settings are inheritted through the 
+	 * reference, and that the overridden value is used instead of the 
+	 * default. It also tests that the command can be overidden through a 
+	 * tool reference.
+	 * 
+	 * Finally, the string option in the configuration is overridden and the 
+	 * test confirms that it contains both the overridden boolean that the 
+	 * target provides, and the overridden string that it provides.   
+	 *  
 	 * @param testSubSub
 	 */
 	private void checkSubSubTarget(ITarget target) {
@@ -1068,6 +1088,7 @@ public class ManagedBuildCoreTests extends TestCase {
 		final String chainedOptName = "Boolean in Chained";
 		final String freeOptValue = "Live free or die";
 		final String newCmd = "Let the Wookie win";
+		final String stringOverride = "The future language of slaves";
 		
 		// Check the inherited clean command
 		assertEquals("rm -yourworld", target.getCleanCommand());
@@ -1079,9 +1100,9 @@ public class ManagedBuildCoreTests extends TestCase {
 		String[] expectedOSList = {"win32","linux","solaris"};
 		assertTrue(Arrays.equals(expectedOSList, target.getTargetOSList()));
 
-		// Get the 4 configurations
+		// Get the 5 configurations (3 from test, 1 from test sub and 1 from this)
 		IConfiguration[] configs = target.getConfigurations();
-		assertEquals(4, configs.length);
+		assertEquals(5, configs.length);
 		
 		// Check the tools. We should have 3 (1 from each parent and the one referenced).
 		ITool[] tools = target.getTools();
@@ -1115,7 +1136,13 @@ public class ManagedBuildCoreTests extends TestCase {
 		assertEquals(freeOptName, optsInCat[0].getName());
 		assertEquals(IOption.STRING, optsInCat[0].getValueType());
 		try {
-			assertEquals(freeOptValue, optsInCat[0].getStringValue());
+			// We get the option categories and options from the tool itself, but the 
+			// tool reference will have a set of 0 to n option references that contain 
+			// overridden settings. In this case, the string is inheritted and should 
+			// not be reference
+			IOption stringOpt = toolRef.getOptionById(optsInCat[0].getId());
+			assertTrue(stringOpt instanceof Option);
+			assertEquals(freeOptValue, stringOpt.getStringValue());
 		} catch (BuildException e1) {
 			fail("Failed getting string value in subsubtarget :" + e1.getLocalizedMessage());
 		}
@@ -1123,10 +1150,12 @@ public class ManagedBuildCoreTests extends TestCase {
 		// Do the same for the options in the child cat
 		IOption[] optsInSubCat = subCategories[0].getOptions(null);
 		assertEquals(1, optsInSubCat.length);
-		assertEquals(chainedOptName, optsInSubCat[0].getName());
-		assertEquals(IOption.BOOLEAN, optsInSubCat[0].getValueType());
+		IOption booleanRef = toolRef.getOptionById(optsInSubCat[0].getId());
+		assertTrue(booleanRef instanceof OptionReference);
+		assertEquals(chainedOptName, booleanRef.getName());
+		assertEquals(IOption.BOOLEAN, booleanRef.getValueType());
 		try {
-			assertFalse(optsInSubCat[0].getBooleanValue());
+			assertTrue(booleanRef.getBooleanValue());
 		} catch (BuildException e) {
 			fail("Failure getting boolean value in subsubtarget: " + e.getLocalizedMessage());
 		}
@@ -1134,6 +1163,57 @@ public class ManagedBuildCoreTests extends TestCase {
 		// Test that the tool command can be changed through the reference
 		((IToolReference)toolRef).setToolCommand(newCmd);
 		assertEquals(toolRef.getToolCommand(), newCmd);
+		
+		// Muck about with the options in the local config
+		IConfiguration subSubConfig = target.getConfiguration("sub.sub.config");
+		assertNotNull(subSubConfig);
+		ITool[] configTools = subSubConfig.getTools();
+		// This tool ref is inherited from parent, so it does not belong to the config
+		ITool configToolRef = configTools[2];
+		assertNotNull(configToolRef);
+		assertFalse(((ToolReference)configToolRef).ownedByConfiguration(subSubConfig));
+		IOption configStringOpt = configToolRef.getOptionById(optsInCat[0].getId());
+		assertNotNull(configStringOpt);
+		// Override the string option		
+		try {
+			subSubConfig.setOption(configStringOpt, stringOverride);
+		} catch (BuildException e) {
+			fail("Failure setting string value in subsubconfiguration: " + e.getLocalizedMessage());
+		}
+		// Now the config should have a tool ref to the independent tool
+		configTools = subSubConfig.getTools();
+		configToolRef = configTools[2];
+		assertNotNull(configToolRef);
+		assertTrue(((ToolReference)configToolRef).ownedByConfiguration(subSubConfig));
+		
+		// Test that the string option is overridden in the configuration
+		configStringOpt = configToolRef.getOptionById(optsInCat[0].getId());
+		try {
+			assertEquals(stringOverride, configStringOpt.getStringValue());
+		} catch (BuildException e) {
+			fail("Failure getting string value in subsubconfiguration: " + e.getLocalizedMessage());
+		}
+		// The tool should also contain the boolean option set to true
+		IOption configBoolOpt = configToolRef.getOptionById(optsInSubCat[0].getId());
+		assertNotNull(configBoolOpt);
+		try {
+			assertTrue(configBoolOpt.getBooleanValue());
+		} catch (BuildException e) {
+			fail("Failure getting boolean value in subsubconfiguration: " + e.getLocalizedMessage());
+		}
+			
+		// Override it in config and retest
+		try {
+			subSubConfig.setOption(configBoolOpt, false);
+		} catch (BuildException e) {
+			fail("Failure setting boolean value in subsubconfiguration: " + e.getLocalizedMessage());
+		}
+		configBoolOpt = configToolRef.getOptionById(optsInSubCat[0].getId());
+		try {
+			assertFalse(configBoolOpt.getBooleanValue());
+		} catch (BuildException e) {
+			fail("Failure getting boolean value in subsubconfiguration: " + e.getLocalizedMessage());
+		}
 	}
 
 	/*
diff --git a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/core/ITool.java b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/core/ITool.java
index 74764229969..e0f7b7889b3 100644
--- a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/core/ITool.java
+++ b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/core/ITool.java
@@ -72,8 +72,9 @@ public interface ITool extends IBuildObject {
 
 	/**
 	 * This is a deprecated method for retrieving an <code>IOption</code> from 
-	 * the receiver based on an ID. It is preferred that you use the newer method
-	 * @see org.eclipse.cdt.core.build.managed.ITool#getOption(java.lang.String)
+	 * the receiver based on an ID. It is preferred that you use the newer method 
+	 * <code>getOptionById</code>
+	 * @see org.eclipse.cdt.core.build.managed.ITool#getOptionById(java.lang.String)
 	 *  
 	 * @param id unique identifier of the option to search for
 	 * @return <code>IOption</code>
diff --git a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Configuration.java b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Configuration.java
index e1f0ac094e7..4b2d76b3371 100644
--- a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Configuration.java
+++ b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Configuration.java
@@ -104,9 +104,10 @@ public class Configuration extends BuildObject implements IConfiguration {
 		// Check that the tool and the project match
 		IProject project = (IProject) target.getOwner();
 		
-		// Get the tool references from the parent
-		List parentToolRefs = ((Configuration)parentConfig).getLocalToolReferences();
-		Iterator iter = parentToolRefs.listIterator();
+		// Get the tool references from the target and parent
+		List allToolRefs = new Vector(target.getLocalToolReferences());
+		allToolRefs.addAll(((Configuration)parentConfig).getLocalToolReferences());
+		Iterator iter = allToolRefs.listIterator();
 		while (iter.hasNext()) {
 			ToolReference toolRef = (ToolReference)iter.next();
 
@@ -231,35 +232,60 @@ public class Configuration extends BuildObject implements IConfiguration {
 	 * @return
 	 */
 	private OptionReference createOptionReference(IOption option) {
+		ToolReference searchRef = null;
+		ToolReference answer = null;
 		// The option may already be a reference created to hold user settings
 		if (option instanceof OptionReference) {
 			// The option reference belongs to an existing tool reference
 			OptionReference optionRef = (OptionReference)option;
-			ToolReference toolRef = optionRef.getToolReference();
+			searchRef = optionRef.getToolReference();
+			
 			// That tool reference may belong to a target or to the configuration
-			if (toolRef.ownedByConfiguration(this))
+			if (searchRef.ownedByConfiguration(this))
 				return optionRef;
 			else {
-				// Make a copy so the settings can be saved
-				toolRef = new ToolReference(this, toolRef);
-				return toolRef.createOptionReference(option);
+				// All this means is that the tool ref does not belong to the receiver. 
+				// The receiver may also have a reference to the tool
+				if ((answer = findLocalReference(searchRef)) == null) {
+					// Otherwise, create one and save the option setting in it
+					answer = new ToolReference(this, searchRef);
+				}
+				return answer.createOptionReference(option);
 			}
 		} else {
 			// Find out if a tool reference already exists
-			ToolReference toolRef = (ToolReference) getToolReference(option.getTool());
-			if (toolRef == null) {
-				toolRef = new ToolReference(this, option.getTool());
+			searchRef = (ToolReference) getToolReference(option.getTool());
+			if (searchRef == null) {
+				answer = new ToolReference(this, option.getTool());
 			} else {
 				// The reference may belong to the target
-				if (!toolRef.ownedByConfiguration(this)) {
-					toolRef = new ToolReference(this, toolRef);
+				if (!searchRef.ownedByConfiguration(this)) {
+					answer = new ToolReference(this, searchRef);
+				} else {
+					answer = searchRef;
 				}
 			}
-		
-			return toolRef.createOptionReference(option);
+			return answer.createOptionReference(option);
 		}
 	}
 
+	/* (non-Javadoc)
+	 * @param toolRef
+	 * @return
+	 */
+	private ToolReference findLocalReference(ToolReference toolRef) {
+		Iterator iter = getLocalToolReferences().iterator();
+		
+		while (iter.hasNext()) {
+			ToolReference ref = (ToolReference)iter.next();
+			if (toolRef.getTool().equals(ref.getTool())) {
+				return ref;
+			}
+		}
+		
+		return null;
+	}
+
 	/* (non-Javadoc)
 	 * @see org.eclipse.cdt.managedbuilder.core.IConfiguration#getFilteredTools(org.eclipse.core.resources.IProject)
 	 */
diff --git a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Target.java b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Target.java
index cfadb475490..d02ee97bf90 100644
--- a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Target.java
+++ b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/Target.java
@@ -502,7 +502,7 @@ public class Target extends BuildObject implements ITarget {
 	 * 
 	 * @return List
 	 */
-	private List getLocalToolReferences() {
+	protected List getLocalToolReferences() {
 		if (toolReferences == null) {
 			toolReferences = new ArrayList();
 		}
diff --git a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/ToolReference.java b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/ToolReference.java
index 37c59a48a6f..f36cb2a77d7 100644
--- a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/ToolReference.java
+++ b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/ToolReference.java
@@ -24,6 +24,7 @@ import org.eclipse.cdt.managedbuilder.core.IOptionCategory;
 import org.eclipse.cdt.managedbuilder.core.ITool;
 import org.eclipse.cdt.managedbuilder.core.IToolReference;
 import org.eclipse.cdt.managedbuilder.core.ManagedBuildManager;
+import org.eclipse.cdt.managedbuilder.core.ManagedBuilderCorePlugin;
 import org.w3c.dom.Document;
 import org.w3c.dom.Element;
 import org.w3c.dom.Node;
@@ -149,15 +150,19 @@ public class ToolReference implements IToolReference {
 	 * Created a tool reference on the fly based on an existing tool or tool reference.
 	 * 
 	 * @param owner The <code>BuildObject</code> the receiver will be added to.
-	 * @param parent The <code>ITool</code>tool the reference will be based on.
+	 * @param tool The <code>ITool</code>tool the reference will be based on.
 	 */
-	public ToolReference(BuildObject owner, ITool parent) {
-		this.parent = parent;
+	public ToolReference(BuildObject owner, ITool tool) {
 		this.owner = owner;
-		command = parent.getToolCommand();
-		outputFlag = parent.getOutputFlag();
-		outputPrefix = parent.getOutputPrefix();
-		String[] extensions = parent.getOutputExtensions();
+		if (tool instanceof ToolReference) {
+			parent = ((ToolReference)tool).getTool();
+		} else {
+			parent = tool;
+		}
+		command = tool.getToolCommand();
+		outputFlag = tool.getOutputFlag();
+		outputPrefix = tool.getOutputPrefix();
+		String[] extensions = tool.getOutputExtensions();
 		outputExtensions = new String();
 		if (extensions != null) {
 			for (int index = 0; index < extensions.length; ++index) {
@@ -169,6 +174,34 @@ public class ToolReference implements IToolReference {
 			}
 		}
 		
+		// Create a copy of the option references of the parent in the receiver
+		if (tool instanceof ToolReference) {
+			List parentRefs = ((ToolReference)tool).getOptionReferenceList();
+			Iterator iter = parentRefs.iterator();
+			while (iter.hasNext()) {
+				IOption parent = (IOption)iter.next();
+				OptionReference clone = createOptionReference(parent);
+				try {
+					switch (parent.getValueType()) {
+						case IOption.BOOLEAN:
+							clone.setValue(parent.getBooleanValue());
+							break;
+						case IOption.STRING:
+							clone.setValue(parent.getStringValue());
+						case IOption.ENUMERATED:
+							clone.setValue(parent.getSelectedEnum());
+							break;
+						default:
+							clone.setValue(parent.getStringListValue());
+							break;
+					}
+				} catch (BuildException e) {
+					ManagedBuilderCorePlugin.log(e);
+					continue;
+				}
+			}
+		}
+		
 		if (owner instanceof Configuration) {
 			((Configuration)owner).addToolReference(this);
 		} else if (owner instanceof Target) {
@@ -250,7 +283,14 @@ public class ToolReference implements IToolReference {
 	public OptionReference createOptionReference(IOption option) {
 		// Check if the option reference already exists
 		OptionReference ref = getOptionReference(option);
-		if (ref == null) {
+		// It is possible that the search will return an option reference
+		// that is supplied by another element of the build model, not the caller. 
+		// For example, if the search is starated by a configuration and the target 
+		// the caller  belongs to has an option reference for the option, it 
+		// will be returned. While this is correct behaviour for a search, the 
+		// caller will need to create a clone for itself, so make sure the tool 
+		// reference of the search result is owned by the caller
+		if (ref == null || !ref.getToolReference().owner.equals(this.owner)) {
 			ref = new OptionReference(this, option);
 		}
 		return ref;
@@ -504,7 +544,6 @@ public class ToolReference implements IToolReference {
 	public List getOptionReferenceList() {
 		if (optionReferences == null) {
 			optionReferences = new ArrayList();
-			optionReferences.clear();
 		}
 		return optionReferences;
 	}
diff --git a/build/org.eclipse.cdt.managedbuilder.ui/plugin.xml b/build/org.eclipse.cdt.managedbuilder.ui/plugin.xml
index 9273f5ea98b..a1cc72c849e 100644
--- a/build/org.eclipse.cdt.managedbuilder.ui/plugin.xml
+++ b/build/org.eclipse.cdt.managedbuilder.ui/plugin.xml
@@ -222,7 +222,7 @@
          <option
                name="%Option.Posix.Linker.Defname"
                category="gnu.c.link.category.shared"
-               command="-Wl,--output-def,"
+               command="-Wl,--output-def="
                id="gnu.c.link.option.defname"
                valueType="string">
          </option>
@@ -307,7 +307,7 @@
          <option
                name="%Option.Posix.Linker.XLinker"
                category="gnu.cpp.link.category.other"
-               command="-Xlinker,"
+               command="-Xlinker "
                valueType="stringList"
                id="gnu.cpp.link.option.other">
          </option>
@@ -348,7 +348,7 @@
          <option
                name="%Option.Posix.Linker.Defname"
                category="gnu.cpp.link.category.shared"
-               command="-Wl,--output-def,"
+               command="-Wl,--output-def="
                valueType="string"
                id="gnu.cpp.link.option.defname">
          </option>
@@ -438,6 +438,27 @@
                name="%Option.Posix.UndefSym"
                id="gnu.windres.option.preprocessor.undefined.symbols"/>
       </tool-->
+      <!--tool
+            command="as"
+            sources="s,S"
+            outputs="o"
+            name="%ToolName.assembler.gnu"
+            outputFlag="-o"
+            id="cdt.managedbuild.tool.gnu.assembler"
+            natureFilter="both">
+         <optionCategory
+               owner="cdt.managedbuild.tool.gnu.assembler"
+               name="%OptionCategory.General"
+               id="gnu.asm.category.general">
+         </optionCategory>
+         <option
+               name="%Option.Posix.Assembler.Flags"
+               category="gnu.asm.category.general"
+               valueType="string"
+               id="gnu.both.asm.option.flags">
+         </option>
+            
+      <tool/-->
       <target
             name="%TargetName.gnu"
             id="cdt.managedbuild.target.gnu"
@@ -1047,11 +1068,17 @@
                outputs="so"
                outputPrefix="lib"
                id="cdt.managedbuild.tool.gnu.c.linker">
+            <optionReference
+                  defaultValue="true"
+                  id="gnu.c.link.option.shared"/>
          </toolReference>
          <toolReference
                outputs="so"
                outputPrefix="lib"
                id="cdt.managedbuild.tool.gnu.cpp.linker">
+            <optionReference
+                  defaultValue="true"
+                  id="gnu.cpp.link.option.shared"/>
          </toolReference>
       </target>
       <target
@@ -1261,10 +1288,16 @@
          <toolReference
                outputs="dll,a.dll"
                id="cdt.managedbuild.tool.gnu.c.linker">
+            <optionReference
+                  defaultValue="true"
+                  id="gnu.c.link.option.shared"/>
          </toolReference>
          <toolReference
                outputs="dll,a.dll"
                id="cdt.managedbuild.tool.gnu.cpp.linker">
+            <optionReference
+                  defaultValue="true"
+                  id="gnu.cpp.link.option.shared"/>
          </toolReference>
       </target>
       <target