diff --git a/terminal/org.eclipse.tm.terminal.telnet/src/org/eclipse/tm/internal/terminal/telnet/TelnetConnectWorker.java b/terminal/org.eclipse.tm.terminal.telnet/src/org/eclipse/tm/internal/terminal/telnet/TelnetConnectWorker.java
index 0b07c772c7a..4c1dcc42eac 100644
--- a/terminal/org.eclipse.tm.terminal.telnet/src/org/eclipse/tm/internal/terminal/telnet/TelnetConnectWorker.java
+++ b/terminal/org.eclipse.tm.terminal.telnet/src/org/eclipse/tm/internal/terminal/telnet/TelnetConnectWorker.java
@@ -1,5 +1,5 @@
 /*******************************************************************************
- * Copyright (c) 2003, 2007 Wind River Systems, Inc. and others.
+ * Copyright (c) 2003, 2009 Wind River Systems, Inc. and others.
  * All rights reserved. This program and the accompanying materials
  * are made available under the terms of the Eclipse Public License v1.0
  * which accompanies this distribution, and is available at
@@ -11,8 +11,9 @@
  * Helmut Haigermoser and Ted Williams.
  *
  * Contributors:
- * Michael Scharf (Wind River) - extracted from TerminalControl 
+ * Michael Scharf (Wind River) - extracted from TerminalControl
  * Martin Oberhuber (Wind River) - fixed copyright headers and beautified
+ * Uwe Stieber (Wind River) - [287158][terminal][telnet] Connect worker is giving up to early
  *******************************************************************************/
 package org.eclipse.tm.internal.terminal.telnet;
 
@@ -35,43 +36,75 @@ class TelnetConnectWorker extends Thread {
 		fControl.setState(TerminalState.CONNECTING);
 	}
 	public void run() {
-		try {
-			int nTimeout = fConn.getTelnetSettings().getTimeout() * 1000;
-			String strHost = fConn.getTelnetSettings().getHost();
-			int nPort = fConn.getTelnetSettings().getNetworkPort();
-			InetSocketAddress address = new InetSocketAddress(strHost, nPort);
-			Socket socket=new Socket();
+		// Retry the connect with after a little pause in case the
+		// remote telnet server isn't ready. ConnectExceptions might
+		// happen if the telnet server process did not initialized itself.
+		// This is seen especially if the telnet server is a process
+		// providing it's input and output via a built in telnet server.
+		int remaining = 10;
 
-			socket.connect(address, nTimeout);
+		while (remaining >= 0) {
+			// Pause before we re-try if the remaining tries are less than the initial value
+			if (remaining < 10) try { Thread.sleep(500); } catch (InterruptedException e) { /* ignored on purpose */ }
 
-			// This next call causes reads on the socket to see TCP urgent data
-			// inline with the rest of the non-urgent data.  Without this call, TCP
-			// urgent data is silently dropped by Java.  This is required for
-			// TELNET support, because when the TELNET server sends "IAC DM", the
-			// IAC byte is TCP urgent data.  If urgent data is silently dropped, we
-			// only see the DM, which looks like an ISO Latin-1 '�' character.
+			try {
+				int nTimeout = fConn.getTelnetSettings().getTimeout() * 1000;
+				String strHost = fConn.getTelnetSettings().getHost();
+				int nPort = fConn.getTelnetSettings().getNetworkPort();
+				InetSocketAddress address = new InetSocketAddress(strHost, nPort);
+				Socket socket=new Socket();
 
-			socket.setOOBInline(true);
-			
-			fConn.setSocket(socket);
+				socket.connect(address, nTimeout);
 
-			TelnetConnection connection=new TelnetConnection(fConn, socket);
-			socket.setKeepAlive(true);
-			fConn.setTelnetConnection(connection);
-			connection.start();
-			fControl.setState(TerminalState.CONNECTED);
+				// If we get to this point, the connect succeeded and we will
+				// force the remaining counter to be 0.
+				remaining = 0;
 
-		} catch (UnknownHostException ex) {
-			String txt="Unknown host: " + ex.getMessage(); //$NON-NLS-1$
-			connectFailed(txt,"Unknown host: " + ex.getMessage() + "\n"); //$NON-NLS-1$ //$NON-NLS-2$
-		} catch (SocketTimeoutException socketTimeoutException) {
-			connectFailed(socketTimeoutException.getMessage(), "Connection Error!\n" + socketTimeoutException.getMessage()); //$NON-NLS-1$
-		} catch (ConnectException connectException) {
-			connectFailed(connectException.getMessage(),"Connection refused!"); //$NON-NLS-1$
-		} catch (Exception exception) {
-			Logger.logException(exception);
+				// This next call causes reads on the socket to see TCP urgent data
+				// inline with the rest of the non-urgent data.  Without this call, TCP
+				// urgent data is silently dropped by Java.  This is required for
+				// TELNET support, because when the TELNET server sends "IAC DM", the
+				// IAC byte is TCP urgent data.  If urgent data is silently dropped, we
+				// only see the DM, which looks like an ISO Latin-1 '�' character.
 
-			connectFailed(exception.getMessage(),""); //$NON-NLS-1$
+				socket.setOOBInline(true);
+
+				fConn.setSocket(socket);
+
+				TelnetConnection connection=new TelnetConnection(fConn, socket);
+				socket.setKeepAlive(true);
+				fConn.setTelnetConnection(connection);
+				connection.start();
+				fControl.setState(TerminalState.CONNECTED);
+
+			} catch (UnknownHostException ex) {
+				// No re-try in case of UnknownHostException, there is no indication that
+				// the DNS will fix itself
+				remaining = 0;
+				//Construct error message and signal failed
+				String txt="Unknown host: " + ex.getMessage(); //$NON-NLS-1$
+				connectFailed(txt,"Unknown host: " + ex.getMessage() + "\n"); //$NON-NLS-1$ //$NON-NLS-2$
+			} catch (SocketTimeoutException socketTimeoutException) {
+				// Time out occurred. No re-try in this case either. Time out can
+				// be increased by the user. Multiplying the timeout with the remaining
+				// counter is not desired.
+				remaining = 0;
+				// Construct error message and signal failed
+				connectFailed(socketTimeoutException.getMessage(), "Connection Error!\n" + socketTimeoutException.getMessage()); //$NON-NLS-1$
+			} catch (ConnectException connectException) {
+				// In case of a ConnectException, do a re-try. The server could have been
+				// simply not ready yet and the worker would give up to early.
+				if (remaining == 0) connectFailed(connectException.getMessage(),"Connection refused!"); //$NON-NLS-1$
+			} catch (Exception exception) {
+				// Any other exception on connect. No re-try in this case either
+				remaining = 0;
+				// Log the exception
+				Logger.logException(exception);
+				// And signal failed
+				connectFailed(exception.getMessage(),""); //$NON-NLS-1$
+			} finally {
+				remaining--;
+			}
 		}
 	}