diff --git a/Makefile b/Makefile
index 4015b58..5f9d874 100644
--- a/Makefile
+++ b/Makefile
@@ -38,9 +38,10 @@ IDN_CFLAGS= `echo $(COPTS) | ../bld/pkg-wrapper HAVE_IDN $(PKG_CONFIG) --cflags
 IDN_LIBS=   `echo $(COPTS) | ../bld/pkg-wrapper HAVE_IDN $(PKG_CONFIG) --libs libidn` 
 CT_CFLAGS=  `echo $(COPTS) | ../bld/pkg-wrapper HAVE_CONNTRACK $(PKG_CONFIG) --cflags libnetfilter_conntrack`
 CT_LIBS=    `echo $(COPTS) | ../bld/pkg-wrapper HAVE_CONNTRACK $(PKG_CONFIG) --libs libnetfilter_conntrack`
-LUA_CFLAGS=`echo $(COPTS) | ../bld/pkg-wrapper HAVE_LUASCRIPT $(PKG_CONFIG) --cflags lua5.1` 
-LUA_LIBS=  `echo $(COPTS) | ../bld/pkg-wrapper HAVE_LUASCRIPT $(PKG_CONFIG) --libs lua5.1` 
+LUA_CFLAGS= `echo $(COPTS) | ../bld/pkg-wrapper HAVE_LUASCRIPT $(PKG_CONFIG) --cflags lua5.1` 
+LUA_LIBS=   `echo $(COPTS) | ../bld/pkg-wrapper HAVE_LUASCRIPT $(PKG_CONFIG) --libs lua5.1` 
 SUNOS_LIBS= `if uname | grep SunOS 2>&1 >/dev/null; then echo -lsocket -lnsl -lposix4; fi`
+VERSION=    -DVERSION='\"`../bld/get-version`\"'
 
 OBJS = cache.o rfc1035.o util.o option.o forward.o network.o \
        dnsmasq.o dhcp.o lease.o rfc2131.o netlink.o dbus.o bpf.o \
@@ -48,7 +49,7 @@ OBJS = cache.o rfc1035.o util.o option.o forward.o network.o \
 
 all :
 	@cd $(SRC) && $(MAKE) \
- BUILD_CFLAGS="$(DBUS_CFLAGS) $(IDN_CFLAGS) $(CT_CFLAGS) $(LUA_CFLAGS)" \
+ BUILD_CFLAGS="$(VERSION) $(DBUS_CFLAGS) $(IDN_CFLAGS) $(CT_CFLAGS) $(LUA_CFLAGS)" \
  BUILD_LIBS="$(DBUS_LIBS) $(IDN_LIBS) $(CT_LIBS) $(LUA_LIBS) $(SUNOS_LIBS)" \
  -f ../Makefile dnsmasq 
 
@@ -65,8 +66,8 @@ install-common :
 
 all-i18n :
 	@cd $(SRC) && $(MAKE) \
- I18N=-DLOCALEDIR='\"$(LOCALEDIR)\"' \
- BUILD_CFLAGS="$(DBUS_CFLAGS) $(CT_CFLAGS) $(LUA_CFLAGS) `$(PKG_CONFIG) --cflags libidn`" \
+ I18N=-DLOCALEDIR=\'\"$(LOCALEDIR)\"\' \
+ BUILD_CFLAGS="$(VERSION) $(DBUS_CFLAGS) $(CT_CFLAGS) $(LUA_CFLAGS) `$(PKG_CONFIG) --cflags libidn`" \
  BUILD_LIBS="$(DBUS_LIBS) $(CT_LIBS) $(LUA_LIBS) $(SUNOS_LIBS) `$(PKG_CONFIG) --libs libidn`"  \
  -f ../Makefile dnsmasq
 	@cd $(PO); for f in *.po; do \
diff --git a/bld/get-version b/bld/get-version
new file mode 100755
index 0000000..42849ce
--- /dev/null
+++ b/bld/get-version
@@ -0,0 +1,28 @@
+#!/bin/sh
+
+# Determine the version string to build into a binary.
+# When building in the git repository, we can use the output 
+# of "git describe" which gives an unequivocal answer.
+#
+# Failing that, we use the contents of the VERSION file
+# which has a set of references substituted into it by git.
+# If we can find one which matches $v[0-9].* then we assume it's
+# a version-number tag, else we just use the whole string.
+
+# we're called with pwd == src
+cd ..
+
+if [ -d .git ]; then
+     git describe
+else
+     vers=`cat VERSION | sed 's/[(), ]/\n/ g' | grep -m 1 $v[0-9]`
+
+     if [ $? -eq 0 ]; then
+         echo ${vers#v}
+     else
+         cat VERSION
+     fi
+fi
+
+exit 0
+
diff --git a/src/config.h b/src/config.h
index a36b84b..ca8e298 100644
--- a/src/config.h
+++ b/src/config.h
@@ -14,8 +14,6 @@
    along with this program.  If not, see <http://www.gnu.org/licenses/>.
 */
 
-#define VERSION "2.60test7"
-
 #define FTABSIZ 150 /* max number of outstanding requests (default) */
 #define MAX_PROCS 20 /* max no children for TCP requests */
 #define CHILD_LIFETIME 150 /* secs 'till terminated (RFC1035 suggests > 120s) */