diff --git a/new/builtin.jam b/new/builtin.jam
index 381fb5b94..ea4db1388 100644
--- a/new/builtin.jam
+++ b/new/builtin.jam
@@ -46,6 +46,7 @@ feature exception-handling : on off : propagated ;
 feature debug-symbols : on off : propagated ;
 feature define : : free ;
 feature "include" : : free path ;
+feature cflags : : free ;
 feature cxxflags : : free ;
 feature linkflags : : free ;
 feature version : : free ;
diff --git a/new/toolset.jam b/new/toolset.jam
index 94e2147f0..23f47751f 100644
--- a/new/toolset.jam
+++ b/new/toolset.jam
@@ -209,12 +209,15 @@ rule set-target-variables ( rule-or-module targets + : properties * )
         }
     }
     
-    # recurse for any module-specific flags
-    local module_ = [ MATCH ^(.+)\\..* : $(rule-or-module) ] ;
-    if $(module_)
+    # strip away last dot separated part and recurse.
+    local next = [ MATCH ^(.+)\\.([^\\.])* : $(rule-or-module) ] ;
+    if $(next)
     {
-        set-target-variables $(module_) $(targets) : $(properties) ;
-        
+        set-target-variables $(next) $(targets) : $(properties) ;        
+    }
+    else
+    {
+        # If there's no next dot-separated element, we've got the module name.
         # Allow a rule-based hook for more-sophisticated setting
         # of build options than flags allows.
         if prepare-target in [ RULENAMES $(module_) ]
@@ -225,6 +228,7 @@ rule set-target-variables ( rule-or-module targets + : properties * )
             }
         }
     }
+    
 }
 
 .toolsets += $(toolset) ;
diff --git a/test/c_file.py b/test/c_file.py
new file mode 100644
index 000000000..30bc90755
--- /dev/null
+++ b/test/c_file.py
@@ -0,0 +1,34 @@
+#!/usr/bin/python
+
+#  Copyright (C) Vladimir Prus 2003. Permission to copy, use, modify, sell and
+#  distribute this software is granted provided this copyright notice appears in
+#  all copies. This software is provided "as is" without express or implied
+#  warranty, and with no claim as to its suitability for any purpose.
+
+#  Test that C files are compiled by C compiler
+from BoostBuild import Tester, List
+
+t = Tester()
+
+t.write("project-root.jam", """
+project ;
+
+exe hello : hello.cpp a.c ;
+""")
+t.write("hello.cpp", """
+extern "C" int foo();
+int main() { return foo(); }
+""")
+t.write("a.c", """
+// This won't compile unless in C mode
+int foo()
+{
+    int new = 0;
+    new = (new+1)*7;
+    return new;
+}
+""")
+t.run_build_system()
+t.expect_addition("bin/$toolset/debug/hello.exe")
+
+t.cleanup()
diff --git a/test/test_all.py b/test/test_all.py
index 2b1386cd0..aec41b1c8 100644
--- a/test/test_all.py
+++ b/test/test_all.py
@@ -96,6 +96,7 @@ tests = [ "project_test1",
           "dependency_property",
           "custom_generator",
           "bad_dirname",
+          "c_file",
 	  ]
 
 if os.name == 'posix':
diff --git a/tools/borland.jam b/tools/borland.jam
index abd82cc6f..10069af76 100644
--- a/tools/borland.jam
+++ b/tools/borland.jam
@@ -63,8 +63,8 @@ type.register BORLAND.TDS : tds ;
 generators.register-linker borland.link "" : RSP : EXE : <toolset>borland ;
 generators.register-linker borland.link "" : RSP : SHARED_LIB IMPORT_LIB : <toolset>borland ;
 generators.register-composing borland.archive : OBJ : STATIC_LIB : <toolset>borland ;
-generators.register-c-compiler borland.compile : CPP : OBJ : <toolset>borland ;
-generators.register-c-compiler borland.compile : C : OBJ : <toolset>borland ;
+generators.register-c-compiler borland.compile.c++ : CPP : OBJ : <toolset>borland ;
+generators.register-c-compiler borland.compile.c : C : OBJ : <toolset>borland ;
 
 
 # Declare flags 
@@ -126,11 +126,18 @@ flags borland NEED_IMPLIB <main-target-type>LIB/<link>shared : "" ;
 # -U$(UNDEFS) -D$(DEFINES) $(CFLAGS) $(C++FLAGS) -I"$(HDRS)"  -I"$(STDHDRS)" -o"$(<)" "$(>)"
 
 
-actions compile
+actions compile.c++
 {
     "$(.root)bcc32" -j5 -g255 -q -c -P -w -Ve -Vx -a8 -b- $(OPTIONS) -D$(DEFINES) -I"$(INCLUDES)" -I"$(STDHDRS)" -o"$(<)" "$(>)"
 }
 
+# For C, we don't pass -P flag
+actions compile.c
+{
+    "$(.root)bcc32" -j5 -g255 -q -c -w -Ve -Vx -a8 -b- $(OPTIONS) -D$(DEFINES) -I"$(INCLUDES)" -I"$(STDHDRS)" -o"$(<)" "$(>)"
+}
+
+
 # Declare flags and action for linking
 toolset.flags borland.link OPTIONS <debug-symbols>on : -v ;
 toolset.flags borland.link LINKPATH <library-path> ;
diff --git a/tools/gcc.jam b/tools/gcc.jam
index 1c61743bc..e8da3117d 100644
--- a/tools/gcc.jam
+++ b/tools/gcc.jam
@@ -51,9 +51,9 @@ if [ os.name ] = NT
 # Declare generators
 generators.register-linker gcc.link : LIB OBJ : EXE : <toolset>gcc ;
 generators.register-composing gcc.archive : OBJ : STATIC_LIB : <toolset>gcc ;
-generators.register-linker gcc.link-dll : LIB OBJ : SHARED_LIB : <toolset>gcc ;
-generators.register-c-compiler gcc.compile : CPP : OBJ : <toolset>gcc ;
-generators.register-c-compiler gcc.compile : C : OBJ : <toolset>gcc ;
+generators.register-linker gcc.link.dll : LIB OBJ : SHARED_LIB : <toolset>gcc ;
+generators.register-c-compiler gcc.compile.c++ : CPP : OBJ : <toolset>gcc ;
+generators.register-c-compiler gcc.compile.c : C : OBJ : <toolset>gcc ;
 
 
 # Declare flags and action for compilation
@@ -68,15 +68,22 @@ flags gcc.compile OPTIONS <inlining>full : -finline-functions -Wno-inline ;
 flags gcc.compile OPTIONS <debug-symbols>on : -g ;
 flags gcc.compile OPTIONS <profiling>on : -pg ;
 
-flags gcc.compile OPTIONS <cxxflags> ;
+flags gcc.compile OPTIONS <cflags> ;
+flags gcc.compile.c++ OPTIONS <cxxflags> ;
 flags gcc.compile DEFINES <define> ;
 flags gcc.compile INCLUDES <include> ;
 
-actions compile
+actions compile.c++
 {
     $(NAME:E=g++) -Wall -ftemplate-depth-100 $(OPTIONS) -D$(DEFINES) -I"$(INCLUDES)" -c -o "$(<)" "$(>)" 
 }
 
+actions compile.c
+{
+    $(NAME:E=gcc) -Wall $(OPTIONS) -D$(DEFINES) -I"$(INCLUDES)" -c -o "$(<)" "$(>)" 
+}
+
+
 # Declare flags and action for linking
 flags gcc.link OPTIONS <debug-symbols>on : -g ;
 # Strip the binary when no debugging is needed.
@@ -89,8 +96,7 @@ flags gcc.link FINDLIBS-SA <find-shared-library> ;
 flags gcc.link LIBRARIES <library> ;
 flags gcc.link LINK-RUNTIME <link-runtime>static : static ;
 flags gcc.link LINK-RUNTIME <link-runtime>shared : dynamic ;
-flags gcc.link-dll RPATH <dll-path> ;
-
+flags gcc.link RPATH <dll-path> ;
 
 rule link ( targets * : sources * : properties * )
 {
@@ -108,25 +114,14 @@ actions piecemeal archive
     ar ur "$(<)" "$(>)"
 }
 
-# Declare flags and action for linking shared libraries
-flags gcc.link-dll OPTIONS <debug-symbols>on : -g ;
-flags gcc.link-dll OPTIONS <debug-symbols>off : -s ;
-flags gcc.link-dll OPTIONS <profiling>on : -pg ;
-flags gcc.link-dll OPTIONS <linkflags> ;
-flags gcc.link-dll LINKPATH <library-path> ;
-flags gcc.link-dll FINDLIBS-ST <find-static-library> ;
-flags gcc.link-dll FINDLIBS-SA <find-shared-library> ;
-flags gcc.link-dll LIBRARIES <library> ;
-flags gcc.link-dll LINK-RUNTIME <link-runtime>static : static ;
-flags gcc.link-dll LINK-RUNTIME <link-runtime>shared : dynamic ;
-flags gcc.link RPATH <dll-path> ;
 
-rule link-dll ( targets * : sources * : properties * )
+rule link.dll ( targets * : sources * : properties * )
 {
     SPACE on $(targets) = " " ;    
 }
 
-actions link-dll bind LIBRARIES
+# Differ from 'link' above only by -shared.
+actions link.dll bind LIBRARIES
 {
     $(NAME:E=g++) $(OPTIONS) -L"$(LINKPATH)" -Wl,-rpath$(SPACE)-Wl,"$(RPATH)" -o "$(<)" -Wl,-soname,$(<[1]:D=) -shared "$(>)"  "$(LIBRARIES)" -Wl,-Bdynamic -l$(FINDLIBS-SA) -Wl,-Bstatic -l$(FINDLIBS-ST) "$(LIBRARIES)" -Wl,-Bdynamic -l$(FINDLIBS-SA) -Wl,-Bstatic -l$(FINDLIBS-ST) -Wl,-B$(LINK-RUNTIME)
 }
diff --git a/v2/build/toolset.jam b/v2/build/toolset.jam
index 94e2147f0..23f47751f 100644
--- a/v2/build/toolset.jam
+++ b/v2/build/toolset.jam
@@ -209,12 +209,15 @@ rule set-target-variables ( rule-or-module targets + : properties * )
         }
     }
     
-    # recurse for any module-specific flags
-    local module_ = [ MATCH ^(.+)\\..* : $(rule-or-module) ] ;
-    if $(module_)
+    # strip away last dot separated part and recurse.
+    local next = [ MATCH ^(.+)\\.([^\\.])* : $(rule-or-module) ] ;
+    if $(next)
     {
-        set-target-variables $(module_) $(targets) : $(properties) ;
-        
+        set-target-variables $(next) $(targets) : $(properties) ;        
+    }
+    else
+    {
+        # If there's no next dot-separated element, we've got the module name.
         # Allow a rule-based hook for more-sophisticated setting
         # of build options than flags allows.
         if prepare-target in [ RULENAMES $(module_) ]
@@ -225,6 +228,7 @@ rule set-target-variables ( rule-or-module targets + : properties * )
             }
         }
     }
+    
 }
 
 .toolsets += $(toolset) ;
diff --git a/v2/test/c_file.py b/v2/test/c_file.py
new file mode 100644
index 000000000..30bc90755
--- /dev/null
+++ b/v2/test/c_file.py
@@ -0,0 +1,34 @@
+#!/usr/bin/python
+
+#  Copyright (C) Vladimir Prus 2003. Permission to copy, use, modify, sell and
+#  distribute this software is granted provided this copyright notice appears in
+#  all copies. This software is provided "as is" without express or implied
+#  warranty, and with no claim as to its suitability for any purpose.
+
+#  Test that C files are compiled by C compiler
+from BoostBuild import Tester, List
+
+t = Tester()
+
+t.write("project-root.jam", """
+project ;
+
+exe hello : hello.cpp a.c ;
+""")
+t.write("hello.cpp", """
+extern "C" int foo();
+int main() { return foo(); }
+""")
+t.write("a.c", """
+// This won't compile unless in C mode
+int foo()
+{
+    int new = 0;
+    new = (new+1)*7;
+    return new;
+}
+""")
+t.run_build_system()
+t.expect_addition("bin/$toolset/debug/hello.exe")
+
+t.cleanup()
diff --git a/v2/test/test_all.py b/v2/test/test_all.py
index 2b1386cd0..aec41b1c8 100644
--- a/v2/test/test_all.py
+++ b/v2/test/test_all.py
@@ -96,6 +96,7 @@ tests = [ "project_test1",
           "dependency_property",
           "custom_generator",
           "bad_dirname",
+          "c_file",
 	  ]
 
 if os.name == 'posix':
diff --git a/v2/tools/borland.jam b/v2/tools/borland.jam
index abd82cc6f..10069af76 100644
--- a/v2/tools/borland.jam
+++ b/v2/tools/borland.jam
@@ -63,8 +63,8 @@ type.register BORLAND.TDS : tds ;
 generators.register-linker borland.link "" : RSP : EXE : <toolset>borland ;
 generators.register-linker borland.link "" : RSP : SHARED_LIB IMPORT_LIB : <toolset>borland ;
 generators.register-composing borland.archive : OBJ : STATIC_LIB : <toolset>borland ;
-generators.register-c-compiler borland.compile : CPP : OBJ : <toolset>borland ;
-generators.register-c-compiler borland.compile : C : OBJ : <toolset>borland ;
+generators.register-c-compiler borland.compile.c++ : CPP : OBJ : <toolset>borland ;
+generators.register-c-compiler borland.compile.c : C : OBJ : <toolset>borland ;
 
 
 # Declare flags 
@@ -126,11 +126,18 @@ flags borland NEED_IMPLIB <main-target-type>LIB/<link>shared : "" ;
 # -U$(UNDEFS) -D$(DEFINES) $(CFLAGS) $(C++FLAGS) -I"$(HDRS)"  -I"$(STDHDRS)" -o"$(<)" "$(>)"
 
 
-actions compile
+actions compile.c++
 {
     "$(.root)bcc32" -j5 -g255 -q -c -P -w -Ve -Vx -a8 -b- $(OPTIONS) -D$(DEFINES) -I"$(INCLUDES)" -I"$(STDHDRS)" -o"$(<)" "$(>)"
 }
 
+# For C, we don't pass -P flag
+actions compile.c
+{
+    "$(.root)bcc32" -j5 -g255 -q -c -w -Ve -Vx -a8 -b- $(OPTIONS) -D$(DEFINES) -I"$(INCLUDES)" -I"$(STDHDRS)" -o"$(<)" "$(>)"
+}
+
+
 # Declare flags and action for linking
 toolset.flags borland.link OPTIONS <debug-symbols>on : -v ;
 toolset.flags borland.link LINKPATH <library-path> ;
diff --git a/v2/tools/builtin.jam b/v2/tools/builtin.jam
index 381fb5b94..ea4db1388 100644
--- a/v2/tools/builtin.jam
+++ b/v2/tools/builtin.jam
@@ -46,6 +46,7 @@ feature exception-handling : on off : propagated ;
 feature debug-symbols : on off : propagated ;
 feature define : : free ;
 feature "include" : : free path ;
+feature cflags : : free ;
 feature cxxflags : : free ;
 feature linkflags : : free ;
 feature version : : free ;
diff --git a/v2/tools/gcc.jam b/v2/tools/gcc.jam
index 1c61743bc..e8da3117d 100644
--- a/v2/tools/gcc.jam
+++ b/v2/tools/gcc.jam
@@ -51,9 +51,9 @@ if [ os.name ] = NT
 # Declare generators
 generators.register-linker gcc.link : LIB OBJ : EXE : <toolset>gcc ;
 generators.register-composing gcc.archive : OBJ : STATIC_LIB : <toolset>gcc ;
-generators.register-linker gcc.link-dll : LIB OBJ : SHARED_LIB : <toolset>gcc ;
-generators.register-c-compiler gcc.compile : CPP : OBJ : <toolset>gcc ;
-generators.register-c-compiler gcc.compile : C : OBJ : <toolset>gcc ;
+generators.register-linker gcc.link.dll : LIB OBJ : SHARED_LIB : <toolset>gcc ;
+generators.register-c-compiler gcc.compile.c++ : CPP : OBJ : <toolset>gcc ;
+generators.register-c-compiler gcc.compile.c : C : OBJ : <toolset>gcc ;
 
 
 # Declare flags and action for compilation
@@ -68,15 +68,22 @@ flags gcc.compile OPTIONS <inlining>full : -finline-functions -Wno-inline ;
 flags gcc.compile OPTIONS <debug-symbols>on : -g ;
 flags gcc.compile OPTIONS <profiling>on : -pg ;
 
-flags gcc.compile OPTIONS <cxxflags> ;
+flags gcc.compile OPTIONS <cflags> ;
+flags gcc.compile.c++ OPTIONS <cxxflags> ;
 flags gcc.compile DEFINES <define> ;
 flags gcc.compile INCLUDES <include> ;
 
-actions compile
+actions compile.c++
 {
     $(NAME:E=g++) -Wall -ftemplate-depth-100 $(OPTIONS) -D$(DEFINES) -I"$(INCLUDES)" -c -o "$(<)" "$(>)" 
 }
 
+actions compile.c
+{
+    $(NAME:E=gcc) -Wall $(OPTIONS) -D$(DEFINES) -I"$(INCLUDES)" -c -o "$(<)" "$(>)" 
+}
+
+
 # Declare flags and action for linking
 flags gcc.link OPTIONS <debug-symbols>on : -g ;
 # Strip the binary when no debugging is needed.
@@ -89,8 +96,7 @@ flags gcc.link FINDLIBS-SA <find-shared-library> ;
 flags gcc.link LIBRARIES <library> ;
 flags gcc.link LINK-RUNTIME <link-runtime>static : static ;
 flags gcc.link LINK-RUNTIME <link-runtime>shared : dynamic ;
-flags gcc.link-dll RPATH <dll-path> ;
-
+flags gcc.link RPATH <dll-path> ;
 
 rule link ( targets * : sources * : properties * )
 {
@@ -108,25 +114,14 @@ actions piecemeal archive
     ar ur "$(<)" "$(>)"
 }
 
-# Declare flags and action for linking shared libraries
-flags gcc.link-dll OPTIONS <debug-symbols>on : -g ;
-flags gcc.link-dll OPTIONS <debug-symbols>off : -s ;
-flags gcc.link-dll OPTIONS <profiling>on : -pg ;
-flags gcc.link-dll OPTIONS <linkflags> ;
-flags gcc.link-dll LINKPATH <library-path> ;
-flags gcc.link-dll FINDLIBS-ST <find-static-library> ;
-flags gcc.link-dll FINDLIBS-SA <find-shared-library> ;
-flags gcc.link-dll LIBRARIES <library> ;
-flags gcc.link-dll LINK-RUNTIME <link-runtime>static : static ;
-flags gcc.link-dll LINK-RUNTIME <link-runtime>shared : dynamic ;
-flags gcc.link RPATH <dll-path> ;
 
-rule link-dll ( targets * : sources * : properties * )
+rule link.dll ( targets * : sources * : properties * )
 {
     SPACE on $(targets) = " " ;    
 }
 
-actions link-dll bind LIBRARIES
+# Differ from 'link' above only by -shared.
+actions link.dll bind LIBRARIES
 {
     $(NAME:E=g++) $(OPTIONS) -L"$(LINKPATH)" -Wl,-rpath$(SPACE)-Wl,"$(RPATH)" -o "$(<)" -Wl,-soname,$(<[1]:D=) -shared "$(>)"  "$(LIBRARIES)" -Wl,-Bdynamic -l$(FINDLIBS-SA) -Wl,-Bstatic -l$(FINDLIBS-ST) "$(LIBRARIES)" -Wl,-Bdynamic -l$(FINDLIBS-SA) -Wl,-Bstatic -l$(FINDLIBS-ST) -Wl,-B$(LINK-RUNTIME)
 }