diff --git a/ChangeLog b/ChangeLog
index 98ec81fef..b62b99d3e 100644
--- a/ChangeLog
+++ b/ChangeLog
@@ -1,16 +1,20 @@
 	* DHT refactoring and support for storing arbitrary data with put
 	* support building on android
 	* improved support for web seeds that don't support keep-alive
-	* improve DHT routing table to return better nodes (lower RTT and closer to target)
-	* don't use pointers to resume_data and file_priorities in add_torrent_params
+	* improve DHT routing table to return better nodes (lower RTT and closer
+	  to target)
+	* don't use pointers to resume_data and file_priorities in
+	  add_torrent_params
 	* allow moving files to absolute paths, out of the download directory
-	* make move_storage more generic to allow both overwriting files as well as taking existing ones
+	* make move_storage more generic to allow both overwriting files as well
+	  as taking existing ones
 	* fix choking issue at high upload rates
 	* optimized rate limiter
 	* make disk cache pool allocator configurable
 	* fix library ABI to not depend on logging being enabled
 	* use hex encoding instead of base32 in create_magnet_uri
-	* include name, save_path and torrent_file in torrent_status, for improved performance
+	* include name, save_path and torrent_file in torrent_status, for
+	  improved performance
 	* separate anonymous mode and force-proxy mode, and tighten it up a bit
 	* add per-tracker scrape information to announce_entry
 	* report errors in read_piece_alert
@@ -23,10 +27,13 @@
 	* improve web seed hash failure case
 	* improve DHT lookup times
 	* uTP path MTU discovery improvements
-	* optimized the torrent creator optimizer to scale significantly better with more files
+	* optimized the torrent creator optimizer to scale significantly better
+	  with more files
 	* fix uTP edge case where udp socket buffer fills up
 	* fix nagle implementation in uTP
 
+	* change semantics of storage allocation to allocate on first write rather
+	  than on startup (behaves better with changing file priorities)
 	* fix resend logic in response to uTP SACK messages
 	* only act on uTP RST packets with correct ack_nr
 	* make uTP errors log in normal log mode (not require verbose)
@@ -36,18 +43,21 @@
 0.16.13 release
 
 	* fix auto-manage issue when pausing session
-	* fix bug in non-sparse mode on windows, causing incorrect file errors to be generated
+	* fix bug in non-sparse mode on windows, causing incorrect file errors to
+	  be generated
 	* fix set_name() on file_storage actually affecting save paths
 	* fix large file support issue on mingw
 	* add some error handling to set_piece_hashes()
 	* fix completed-on timestamp to not be clobbered on each startup
 	* fix deadlock caused by some UDP tracker failures
 	* fix potential integer overflow issue in timers on windows
-	* minor fix to peer_proportional mixed_mode algorithm (TCP limit could go too low)
+	* minor fix to peer_proportional mixed_mode algorithm (TCP limit could go
+	  too low)
 	* graceful pause fix
 	* i2p fixes
 	* fix issue when loading certain malformed .torrent files
-	* pass along host header with http proxy requests and possible http_connection shutdown hang
+	* pass along host header with http proxy requests and possible
+	  http_connection shutdown hang
 
 0.16.12 release
 
@@ -70,7 +80,8 @@
 	* deprecate std::wstring overloads. long live utf-8
 	* improve time-critical pieces feature (streaming)
 	* introduce bandwidth exhaustion attack-mitigation in allowed-fast pieces
-	* python binding fix issue where torrent_info objects where destructing when their torrents were deleted
+	* python binding fix issue where torrent_info objects where destructing when
+	  their torrents were deleted
 	* added missing field to scrape_failed_alert in python bindings
 	* GCC 4.8 fix
 	* fix proxy failure semantics with regards to anonymous mode
@@ -85,19 +96,25 @@
 	* add a number of missing functions to the python binding
 	* fix typo in Jamfile for building shared libraries
 	* prevent tracker exchange for magnet links before metadata is received
-	* fix crash in make_magnet_uri when generating links longer than 1024 characters
+	* fix crash in make_magnet_uri when generating links longer than 1024
+	  characters
 	* fix hanging issue when closing files on windows (completing a download)
-	* fix piece picking edge case that could cause torrents to get stuck at hash failure
-	* try unencrypted connections first, and fall back to encryption if it fails (performance improvement)
-	* add missing functions to python binding (flush_cache(), remap_files() and orig_files())
+	* fix piece picking edge case that could cause torrents to get stuck at
+	  hash failure
+	* try unencrypted connections first, and fall back to encryption if it
+	  fails (performance improvement)
+	* add missing functions to python binding (flush_cache(), remap_files()
+	  and orig_files())
 	* improve handling of filenames that are invalid on windows
 	* support 'implied_port' in DHT announce_peer
-	* don't use pool allocator for disk blocks (cache may now return pages to the kernel)
+	* don't use pool allocator for disk blocks (cache may now return pages
+	  to the kernel)
 
 0.16.9 release
 
 	* fix long filename truncation on windows
-	* distinguish file open mode when checking files and downloading/seeding with bittorrent. updates storage interface
+	* distinguish file open mode when checking files and downloading/seeding
+	  with bittorrent. updates storage interface
 	* improve file_storage::map_file when dealing with invalid input
 	* improve handling of invalid utf-8 sequences in strings in torrent files
 	* handle more cases of broken .torrent files
@@ -120,7 +137,8 @@
 	* fix potential packet allocation alignment issue in utp
 	* make 'close_redudnant_connections' cover more cases
 	* set_piece_deadline() also unfilters the piece (if its priority is 0)
-	* add work-around for bug in windows vista and earlier in GetOverlappedResult
+	* add work-around for bug in windows vista and earlier in
+	  GetOverlappedResult
 	* fix traversal algorithm leak in DHT
 	* fix string encoding conversions on windows
 	* take torrent_handle::query_pieces into account in torrent_handle::statue()
@@ -141,13 +159,15 @@
 	* added missing pop_alerts() to python bindings
 	* fixed typos in configure script, inversing some feature-enable/disable flags
 	* added missing flag_update_subscribe to python bindings
-	* active_dht_limit, active_tracker_limit and active_lsd_limit now interpret -1 as infinite
+	* active_dht_limit, active_tracker_limit and active_lsd_limit now
+	  interpret -1 as infinite
 
 0.16.6 release
 
 	* fixed verbose log error for NAT holepunching
 	* fix a bunch of typos in python bindings
-	* make get_settings available in the python binding regardless of deprecated functions
+	* make get_settings available in the python binding regardless of
+	  deprecated functions
 	* fix typo in python settings binding
 	* fix possible dangling pointer use in peer list
 	* fix support for storing arbitrary data in the DHT
@@ -166,22 +186,27 @@
 	* consistently disconnect the same peer when two peers simultaneously connect
 	* fix local endpoint queries for uTP connections
 	* small optimization to local peer discovery to ignore our own broadcasts
-	* try harder to bind the udp socket (uTP, DHT, UDP-trackers, LSD) to the same port as TCP
+	* try harder to bind the udp socket (uTP, DHT, UDP-trackers, LSD) to the
+	  same port as TCP
 	* relax file timestamp requirements for accepting resume data
-	* fix performance issue in web seed downloader (coalescing of blocks sometimes wouldn't work)
-	* web seed fixes (better support for torrents without trailing / in web seeds)
+	* fix performance issue in web seed downloader (coalescing of blocks
+	  sometimes wouldn't work)
+	* web seed fixes (better support for torrents without trailing / in
+	  web seeds)
 	* fix some issues with SSL over uTP connections
 	* fix UDP trackers trying all endpoints behind the hostname
 
 0.16.4 release
 
-	* raise the default number of torrents allowed to announce to trackers to 1600
+	* raise the default number of torrents allowed to announce to trackers
+	  to 1600
 	* improve uTP slow start behavior
 	* fixed UDP socket error causing it to fail on Win7
 	* update use of boost.system to not use deprecated functions
 	* fix GIL issue in python bindings. Deprecated extension support in python
 	* fixed bug where setting upload slots to -1 would not mean infinite
-	* extend the UDP tracker protocol to include the request string from the tracker URL
+	* extend the UDP tracker protocol to include the request string from the
+	  tracker URL
 	* fix mingw build for linux crosscompiler
 
 0.16.3 release
diff --git a/include/libtorrent/storage.hpp b/include/libtorrent/storage.hpp
index 316d8f73e..3e63e294d 100644
--- a/include/libtorrent/storage.hpp
+++ b/include/libtorrent/storage.hpp
@@ -62,6 +62,7 @@ POSSIBILITY OF SUCH DAMAGE.
 #include "libtorrent/thread.hpp"
 #include "libtorrent/storage_defs.hpp"
 #include "libtorrent/allocator.hpp"
+#include "libtorrent/bitfield.hpp"
 
 // OVERVIEW
 //
@@ -457,6 +458,13 @@ namespace libtorrent
 		// instances use the same pool
 		file_pool& m_pool;
 
+		// this is a bitfield with one bit per file. A bit being set means
+		// we've written to that file previously. If we do write to a file
+		// whose bit is 0, we set the file size, to make the file allocated
+		// on disk (in full allocation mode) and just sparsely allocated in
+		// case of sparse allocation mode
+		bitfield m_file_created;
+
 		int m_page_size;
 		bool m_allocate_files;
 	};
diff --git a/src/storage.cpp b/src/storage.cpp
index d7bb5e57b..464da058a 100644
--- a/src/storage.cpp
+++ b/src/storage.cpp
@@ -401,6 +401,8 @@ namespace libtorrent
 	{
 		m_allocate_files = allocate_files;
 		error_code ec;
+		m_file_created.resize(files().num_files(), false);
+
 		// first, create all missing directories
 		std::string last_path;
 		for (int file_index = 0; file_index < files().num_files(); ++file_index)
@@ -423,12 +425,10 @@ namespace libtorrent
 				break;
 			}
 
-			// ec is either ENOENT or the file existed and s is valid
-			// allocate file only if it is not exist and (allocate_files == true)
 			// if the file already exists, but is larger than what
-			// it's supposed to be, also truncate it
+			// it's supposed to be, truncate it
 			// if the file is empty, just create it either way.
-			if ((ec && allocate_files) || (!ec && s.file_size > files().file_size(file_index)) || files().file_size(file_index) == 0)
+			if ((!ec && s.file_size > files().file_size(file_index)) || files().file_size(file_index) == 0)
 			{
 				std::string dir = parent_path(file_path);
 
@@ -1200,7 +1200,8 @@ ret:
 
 			error_code ec;
 			file_handle = open_file(file_index, op.mode, ec);
-			if (((op.mode & file::rw_mask) == file::read_write) && ec == boost::system::errc::no_such_file_or_directory)
+			if (((op.mode & file::rw_mask) != file::read_only)
+				&& ec == boost::system::errc::no_such_file_or_directory)
 			{
 				// this means the directory the file is in doesn't exist.
 				// so create it
@@ -1220,6 +1221,22 @@ ret:
 				return -1;
 			}
 
+			if (m_allocate_files && (op.mode & file::rw_mask) != file::read_only)
+			{
+				TORRENT_ASSERT(m_file_created.size() == files().num_files());
+				if (m_file_created[file_index] == false)
+				{
+					file_handle->set_size(files().file_size(file_index), ec);
+					m_file_created.set_bit(file_index);
+					if (ec)
+					{
+						set_error(combine_path(m_save_path
+							, files().file_path(file_index, m_save_path)), ec);
+						return -1;
+					}
+				}
+			}
+
 			int num_tmp_bufs = copy_bufs(current_buf, file_bytes_left, tmp_bufs);
 			TORRENT_ASSERT(count_bufs(tmp_bufs, file_bytes_left) == num_tmp_bufs);
 			TORRENT_ASSERT(num_tmp_bufs <= num_bufs);
@@ -1235,7 +1252,7 @@ ret:
 			{
 				bytes_transferred = (int)(this->*op.unaligned_op)(file_handle, adjusted_offset
 					, tmp_bufs, num_tmp_bufs, ec);
-				if ((op.mode & file::rw_mask) == file::read_write
+				if ((op.mode & file::rw_mask) != file::read_only
 					&& adjusted_offset + bytes_transferred >= files().file_size(file_index)
 					&& (file_handle->pos_alignment() > 0 || file_handle->size_alignment() > 0))
 				{
diff --git a/test/test_storage.cpp b/test/test_storage.cpp
index 7995e7b0e..48b97b231 100644
--- a/test/test_storage.cpp
+++ b/test/test_storage.cpp
@@ -693,8 +693,33 @@ void test_remove(std::string const& test_path, bool unbuffered)
 		fprintf(stderr, "default_storage::initialize %s: %s\n", s->error().message().c_str(), s->error_file().c_str());
 	}
 
-	TEST_CHECK(exists(combine_path(test_path, combine_path("temp_storage", combine_path("_folder3", combine_path("subfolder", "test5.tmp"))))));	
-	TEST_CHECK(exists(combine_path(test_path, combine_path("temp_storage", combine_path("folder2", "test3.tmp")))));	
+	// files are created on first write
+	TEST_CHECK(!exists(combine_path(test_path, combine_path("temp_storage"
+		, combine_path("_folder3", combine_path("subfolder", "test5.tmp"))))));	
+	TEST_CHECK(exists(combine_path(test_path, combine_path("temp_storage"
+		, combine_path("folder2", "test3.tmp")))));	
+	TEST_CHECK(!exists(combine_path(test_path, combine_path("temp_storage"
+		, combine_path("folder1", "test2.tmp")))));	
+
+	file::iovec_t b = {&buf[0], 4};
+	s->writev(&b, 2, 0, 1);
+
+	TEST_CHECK(exists(combine_path(test_path, combine_path("temp_storage"
+		, combine_path("folder1", "test2.tmp")))));	
+	TEST_CHECK(!exists(combine_path(test_path, combine_path("temp_storage"
+		, combine_path("_folder3", combine_path("subfolder", "test5.tmp"))))));	
+	file_status st;
+	stat_file(combine_path(test_path, combine_path("temp_storage"
+		, combine_path("folder1", "test2.tmp"))), &st, ec);
+	TEST_EQUAL(st.file_size, 8);
+
+	s->writev(&b, 4, 0, 1);
+
+	TEST_CHECK(exists(combine_path(test_path, combine_path("temp_storage"
+		, combine_path("_folder3", combine_path("subfolder", "test5.tmp"))))));	
+	stat_file(combine_path(test_path, combine_path("temp_storage"
+		, combine_path("_folder3", "test5.tmp"))), &st, ec);
+	TEST_EQUAL(st.file_size, 8);
 
 	s->delete_files();