diff --git a/new/builtin.jam b/new/builtin.jam
index 4ac6f4cd5..28bd4a631 100644
--- a/new/builtin.jam
+++ b/new/builtin.jam
@@ -240,14 +240,29 @@ if [ os.name ] = NT  # must be conditional; we'll error on other OSes
 }
 
 
-flags builtin.response-file LIBRARIES <library> ;
-
 # response-file generation is broken up into two phases, the first of
 # which overwrites any existing file and the second of which appends
 # to the file, piecemeal, so that no command-line is too long.
 rule response-file ( target : sources * : properties * )
 {
-    sources += [ on $(target) return $(LIBRARIES) ] ;
+    # Add libraries from <library> property to the list of sources.
+    local libraries ;
+    for local p in $(properties)
+    {
+        if $(p:G) = <library> && 
+          ! [ type.is-derived [ $(p:G=).type ] SHARED_LIB ] 
+        {
+            libraries += $(p:G=) ;
+        }          
+    }
+    # Get real jam targets
+    local xlibraries ;
+    for local l in $(libraries)
+    {
+        xlibraries += [ $(l).actualize ] ;
+    }
+    
+    sources += $(xlibraries) ; 
     
     response-file-1 $(target) : $(sources[1]) ;
     if $(sources[2-])
@@ -511,24 +526,25 @@ rule link-action ( targets + : sources * : action-name : properties * )
             if [ class.is-a $(s) : searched-lib-target ]
             {
                 local name = [ $(s).real-name ] ;
+                local search = [ $(s).search ] ;                
                 if [ $(s).shared ] 
                 {                    
                     properties2 += <find-shared-library>$(name) ;
+                    if $(hardcore-rpath)
+                    {
+                        rpaths += $(search) ;
+                    }                                    
                 }
                 else
                 {
                     properties2 += <find-static-library>$(name) ;
                 }         
-                local search = [ $(s).search ] ;
-                if $(hardcore-rpath)
-                {
-                    rpaths += $(search) ;
-                }                
                 properties2 += <library-path>$(search) ;
             } 
             else 
             {
-                if $(hardcore-rpath)
+                if $(hardcore-rpath) && 
+                  [ type.is-derived [ $(s).type ] SHARED_LIB ] 
                 {
                     rpaths += [ path.root [ $(s).path ] $(pwd) ] ;
                 }                
diff --git a/v2/tools/builtin.jam b/v2/tools/builtin.jam
index 4ac6f4cd5..28bd4a631 100644
--- a/v2/tools/builtin.jam
+++ b/v2/tools/builtin.jam
@@ -240,14 +240,29 @@ if [ os.name ] = NT  # must be conditional; we'll error on other OSes
 }
 
 
-flags builtin.response-file LIBRARIES <library> ;
-
 # response-file generation is broken up into two phases, the first of
 # which overwrites any existing file and the second of which appends
 # to the file, piecemeal, so that no command-line is too long.
 rule response-file ( target : sources * : properties * )
 {
-    sources += [ on $(target) return $(LIBRARIES) ] ;
+    # Add libraries from <library> property to the list of sources.
+    local libraries ;
+    for local p in $(properties)
+    {
+        if $(p:G) = <library> && 
+          ! [ type.is-derived [ $(p:G=).type ] SHARED_LIB ] 
+        {
+            libraries += $(p:G=) ;
+        }          
+    }
+    # Get real jam targets
+    local xlibraries ;
+    for local l in $(libraries)
+    {
+        xlibraries += [ $(l).actualize ] ;
+    }
+    
+    sources += $(xlibraries) ; 
     
     response-file-1 $(target) : $(sources[1]) ;
     if $(sources[2-])
@@ -511,24 +526,25 @@ rule link-action ( targets + : sources * : action-name : properties * )
             if [ class.is-a $(s) : searched-lib-target ]
             {
                 local name = [ $(s).real-name ] ;
+                local search = [ $(s).search ] ;                
                 if [ $(s).shared ] 
                 {                    
                     properties2 += <find-shared-library>$(name) ;
+                    if $(hardcore-rpath)
+                    {
+                        rpaths += $(search) ;
+                    }                                    
                 }
                 else
                 {
                     properties2 += <find-static-library>$(name) ;
                 }         
-                local search = [ $(s).search ] ;
-                if $(hardcore-rpath)
-                {
-                    rpaths += $(search) ;
-                }                
                 properties2 += <library-path>$(search) ;
             } 
             else 
             {
-                if $(hardcore-rpath)
+                if $(hardcore-rpath) && 
+                  [ type.is-derived [ $(s).type ] SHARED_LIB ] 
                 {
                     rpaths += [ path.root [ $(s).path ] $(pwd) ] ;
                 }