diff --git a/vp8/encoder/firstpass.c b/vp8/encoder/firstpass.c
index 7cf50415daf58e8d21a94fb48a14fbde8b56de13..b563968bc0b67d187ec550c09cdc0154440612a8 100644
--- a/vp8/encoder/firstpass.c
+++ b/vp8/encoder/firstpass.c
@@ -243,33 +243,58 @@ static int frame_max_bits(VP8_COMP *cpi)
     int max_bits;
 
     // For CBR we need to also consider buffer fullness.
-    // If we are running below the optimal level then we need to gradually tighten up on max_bits.
     if (cpi->oxcf.end_usage == USAGE_STREAM_FROM_SERVER)
     {
-        double buffer_fullness_ratio = (double)cpi->buffer_level / DOUBLE_DIVIDE_CHECK((double)cpi->oxcf.optimal_buffer_level);
+        max_bits = 2 * cpi->av_per_frame_bandwidth;
+        max_bits -= cpi->buffered_av_per_frame_bandwidth;
+        max_bits *= ((double)cpi->oxcf.two_pass_vbrmax_section / 100.0);
+    }
+    // VBR
+    else
+    {
+        // For VBR base this on the bits and frames left plus the two_pass_vbrmax_section rate passed in by the user
+        max_bits = (int)(((double)cpi->twopass.bits_left / (cpi->twopass.total_stats->count - (double)cpi->common.current_video_frame)) * ((double)cpi->oxcf.two_pass_vbrmax_section / 100.0));
+    }
+
+    // Trap case where we are out of bits
+    if (max_bits < 0)
+        max_bits = 0;
 
-        // For CBR base this on the target average bits per frame plus the maximum sedction rate passed in by the user
-        max_bits = (int)(cpi->av_per_frame_bandwidth * ((double)cpi->oxcf.two_pass_vbrmax_section / 100.0));
+    return max_bits;
+}
 
-        // If our buffer is below the optimum level
-        if (buffer_fullness_ratio < 1.0)
-        {
-            // The lower of max_bits / 4 or cpi->av_per_frame_bandwidth / 4.
-            int min_max_bits = ((cpi->av_per_frame_bandwidth >> 2) < (max_bits >> 2)) ? cpi->av_per_frame_bandwidth >> 2 : max_bits >> 2;
 
-            max_bits = (int)(max_bits * buffer_fullness_ratio);
+static int gf_group_max_bits(VP8_COMP *cpi)
+{
+    // Max allocation for a golden frame group
+    int max_bits;
 
-            if (max_bits < min_max_bits)
-                max_bits = min_max_bits;       // Lowest value we will set ... which should allow the buffer to refil.
+    // For CBR we need to also consider buffer fullness.
+    if (cpi->oxcf.end_usage == USAGE_STREAM_FROM_SERVER)
+    {
+        max_bits = cpi->av_per_frame_bandwidth * cpi->baseline_gf_interval;
+        if (max_bits > cpi->oxcf.optimal_buffer_level)
+        {
+            max_bits -= cpi->oxcf.optimal_buffer_level;
+            max_bits += cpi->buffer_level;
         }
+        else
+        {
+            max_bits -= (cpi->buffered_av_per_frame_bandwidth
+                         - cpi->av_per_frame_bandwidth)
+                        * cpi->baseline_gf_interval;
+        }
+
+        max_bits *= ((double)cpi->oxcf.two_pass_vbrmax_section / 100.0);
     }
-    // VBR
     else
     {
         // For VBR base this on the bits and frames left plus the two_pass_vbrmax_section rate passed in by the user
         max_bits = (int)(((double)cpi->twopass.bits_left / (cpi->twopass.total_stats->count - (double)cpi->common.current_video_frame)) * ((double)cpi->oxcf.two_pass_vbrmax_section / 100.0));
+        max_bits *=  cpi->baseline_gf_interval;
     }
 
+
     // Trap case where we are out of bits
     if (max_bits < 0)
         max_bits = 0;
@@ -1357,7 +1382,7 @@ static void define_gf_group(VP8_COMP *cpi, FIRSTPASS_STATS *this_frame)
     double abs_mv_in_out_accumulator = 0.0;
     double mod_err_per_mb_accumulator = 0.0;
 
-    int max_bits = frame_max_bits(cpi);     // Max for a single frame
+    int max_group_bits;
 
     unsigned int allow_alt_ref =
                     cpi->oxcf.play_alternate && cpi->oxcf.lag_in_frames;
@@ -1711,8 +1736,9 @@ static void define_gf_group(VP8_COMP *cpi, FIRSTPASS_STATS *this_frame)
     cpi->twopass.gf_group_bits = (cpi->twopass.gf_group_bits < 0) ? 0 : (cpi->twopass.gf_group_bits > cpi->twopass.kf_group_bits) ? cpi->twopass.kf_group_bits : cpi->twopass.gf_group_bits;
 
     // Clip cpi->twopass.gf_group_bits based on user supplied data rate variability limit (cpi->oxcf.two_pass_vbrmax_section)
-    if (cpi->twopass.gf_group_bits > max_bits * cpi->baseline_gf_interval)
-        cpi->twopass.gf_group_bits = max_bits * cpi->baseline_gf_interval;
+    max_group_bits = gf_group_max_bits(cpi);
+    if (cpi->twopass.gf_group_bits > max_group_bits)
+        cpi->twopass.gf_group_bits = max_group_bits;
 
     // Reset the file position
     reset_fpf_position(cpi, start_pos);
@@ -1806,13 +1832,6 @@ static void define_gf_group(VP8_COMP *cpi, FIRSTPASS_STATS *this_frame)
             }
         }
 
-        // Apply an additional limit for CBR
-        if (cpi->oxcf.end_usage == USAGE_STREAM_FROM_SERVER)
-        {
-            if (cpi->twopass.gf_bits > (cpi->buffer_level >> 1))
-                cpi->twopass.gf_bits = cpi->buffer_level >> 1;
-        }
-
         // Dont allow a negative value for gf_bits
         if (cpi->twopass.gf_bits < 0)
             cpi->twopass.gf_bits = 0;
diff --git a/vp8/encoder/onyx_if.c b/vp8/encoder/onyx_if.c
index 15d92899ee09518f3c9e67ec5db4b4074b0c3bc6..023384edc061bb31840c15c960ecbd93a07b9637 100644
--- a/vp8/encoder/onyx_if.c
+++ b/vp8/encoder/onyx_if.c
@@ -1473,6 +1473,7 @@ static void init_config(VP8_PTR ptr, VP8_CONFIG *oxcf)
     cpi->rolling_actual_bits          = cpi->av_per_frame_bandwidth;
     cpi->long_rolling_target_bits     = cpi->av_per_frame_bandwidth;
     cpi->long_rolling_actual_bits     = cpi->av_per_frame_bandwidth;
+    cpi->buffered_av_per_frame_bandwidth = cpi->av_per_frame_bandwidth;
 
     cpi->total_actual_bits            = 0;
     cpi->total_target_vs_actual       = 0;
@@ -1568,7 +1569,7 @@ void vp8_change_config(VP8_PTR ptr, VP8_CONFIG *oxcf)
         break;
     }
 
-    if (cpi->pass == 0)
+    if (cpi->pass == 0 && cpi->oxcf.end_usage != USAGE_STREAM_FROM_SERVER)
         cpi->auto_worst_q = 1;
 
     cpi->oxcf.worst_allowed_q = q_trans[oxcf->worst_allowed_q];
@@ -3411,7 +3412,8 @@ static void encode_frame_to_data_rate
     // For CBR if the buffer reaches its maximum level then we can no longer
     // save up bits for later frames so we might as well use them up
     // on the current frame.
-    if ((cpi->oxcf.end_usage == USAGE_STREAM_FROM_SERVER) &&
+    if (cpi->pass == 2
+        && (cpi->oxcf.end_usage == USAGE_STREAM_FROM_SERVER) &&
         (cpi->buffer_level >= cpi->oxcf.optimal_buffer_level) && cpi->buffered_mode)
     {
         int Adjustment = cpi->active_worst_quality / 4;       // Max adjustment is 1/4
@@ -3502,6 +3504,9 @@ static void encode_frame_to_data_rate
         }
         else
         {
+            if(cpi->pass != 2)
+                Q = cpi->avg_frame_qindex;
+
             cpi->active_best_quality = inter_minq[Q];
 
             // For the constant/constrained quality mode we dont want
@@ -3803,15 +3808,16 @@ static void encode_frame_to_data_rate
             (cpi->active_worst_quality < cpi->worst_quality)      &&
             (cpi->projected_frame_size > frame_over_shoot_limit))
         {
-            int over_size_percent = ((cpi->projected_frame_size - frame_over_shoot_limit) * 100) / frame_over_shoot_limit;
+            /* step down active_worst_quality such that the corresponding
+             * active_best_quality will be equal to the current
+             * active_worst_quality + 1
+             */
+            int i;
 
-            // If so is there any scope for relaxing it
-            while ((cpi->active_worst_quality < cpi->worst_quality) && (over_size_percent > 0))
-            {
-                cpi->active_worst_quality++;
-                top_index = cpi->active_worst_quality;
-                over_size_percent = (int)(over_size_percent * 0.96);        // Assume 1 qstep = about 4% on frame size.
-            }
+            for(i=cpi->active_worst_quality; i<cpi->worst_quality; i++)
+                if(inter_minq[i] >= cpi->active_worst_quality + 1)
+                    break;
+            cpi->active_worst_quality = i;
 
             // If we have updated the active max Q do not call vp8_update_rate_correction_factors() this loop.
             active_worst_qchanged = TRUE;
@@ -4203,10 +4209,9 @@ static void encode_frame_to_data_rate
 
     // Update the buffer level variable.
     // Non-viewable frames are a special case and are treated as pure overhead.
-    if ( !cm->show_frame )
-        cpi->bits_off_target -= cpi->projected_frame_size;
-    else
-        cpi->bits_off_target += cpi->av_per_frame_bandwidth - cpi->projected_frame_size;
+    if ( cm->show_frame )
+        cpi->bits_off_target += cpi->av_per_frame_bandwidth;
+    cpi->bits_off_target -= cpi->projected_frame_size;
 
     // Rolling monitors of whether we are over or underspending used to help regulate min and Max Q in two pass.
     cpi->rolling_target_bits = ((cpi->rolling_target_bits * 3) + cpi->this_frame_target + 2) / 4;
@@ -4220,7 +4225,33 @@ static void encode_frame_to_data_rate
     // Debug stats
     cpi->total_target_vs_actual += (cpi->this_frame_target - cpi->projected_frame_size);
 
-    cpi->buffer_level = cpi->bits_off_target;
+    // Update the buffered average bitrate
+    {
+        long long numerator;
+
+        numerator = cpi->oxcf.maximum_buffer_size
+                    - cpi->buffered_av_per_frame_bandwidth
+                    + cpi->projected_frame_size;
+        numerator *= cpi->buffered_av_per_frame_bandwidth;
+        cpi->buffered_av_per_frame_bandwidth = numerator
+                                               / cpi->oxcf.maximum_buffer_size;
+    }
+
+    {
+        long long tmp = (long long)cpi->buffered_av_per_frame_bandwidth
+                        * cpi->oxcf.maximum_buffer_size
+                        / cpi->av_per_frame_bandwidth;
+        cpi->buffer_level = cpi->oxcf.maximum_buffer_size
+                            - tmp
+                            + cpi->oxcf.optimal_buffer_level;
+    }
+
+    // Accumulate overshoot error.
+    cpi->accumulated_overshoot +=
+        (cpi->projected_frame_size > cpi->av_per_frame_bandwidth)
+        ? cpi->projected_frame_size - cpi->av_per_frame_bandwidth
+        : 0;
+
 
     // Update bits left to the kf and gf groups to account for overshoot or undershoot on these frames
     if (cm->frame_type == KEY_FRAME)
diff --git a/vp8/encoder/onyx_int.h b/vp8/encoder/onyx_int.h
index 663786004275480b824bfc865f8bbe968271a530..84ddeeba6080ae037269f1bceb1fe8e71c5402b6 100644
--- a/vp8/encoder/onyx_int.h
+++ b/vp8/encoder/onyx_int.h
@@ -351,6 +351,10 @@ typedef struct VP8_COMP
     int per_frame_bandwidth;          // Current section per frame bandwidth target
     int av_per_frame_bandwidth;        // Average frame size target for clip
     int min_frame_bandwidth;          // Minimum allocation that should be used for any frame
+    int buffered_av_per_frame_bandwidth; // Average bitrate over the last buffer
+    int buffered_av_per_frame_bandwidth_rem; // Average bitrate remainder
+    int accumulated_overshoot;           // Accumulated # of bits spent > target
+
     int inter_frame_target;
     double output_frame_rate;
     long long last_time_stamp_seen;
diff --git a/vp8/encoder/ratectrl.c b/vp8/encoder/ratectrl.c
index 54c394dfc74a47f8bfe87c3a2679e343209271f2..73e1437b595739f5799a8d62e8012766eaecb230 100644
--- a/vp8/encoder/ratectrl.c
+++ b/vp8/encoder/ratectrl.c
@@ -605,10 +605,10 @@ static void calc_gf_params(VP8_COMP *cpi)
 
 static void calc_pframe_target_size(VP8_COMP *cpi)
 {
-    int min_frame_target;
+    int min_frame_target, max_frame_target;
     int Adjustment;
 
-    min_frame_target = 0;
+    min_frame_target = 1;
 
     if (cpi->pass == 2)
     {
@@ -616,10 +616,19 @@ static void calc_pframe_target_size(VP8_COMP *cpi)
 
         if (min_frame_target < (cpi->av_per_frame_bandwidth >> 5))
             min_frame_target = cpi->av_per_frame_bandwidth >> 5;
+
+        max_frame_target = INT_MAX;
     }
-    else if (min_frame_target < cpi->per_frame_bandwidth / 4)
-        min_frame_target = cpi->per_frame_bandwidth / 4;
+    else
+    {
+        if (min_frame_target < cpi->per_frame_bandwidth / 4)
+            min_frame_target = cpi->per_frame_bandwidth / 4;
 
+        /* Don't allow the target to completely deplete the buffer. */
+        max_frame_target = cpi->buffer_level + cpi->av_per_frame_bandwidth;
+        if(max_frame_target < min_frame_target)
+            max_frame_target = min_frame_target;
+    }
 
     // Special alt reference frame case
     if (cpi->common.refresh_alt_ref_frame)
@@ -1112,6 +1121,32 @@ static void calc_pframe_target_size(VP8_COMP *cpi)
 
         }
     }
+
+    if (cpi->pass==0 && cpi->oxcf.end_usage == USAGE_STREAM_FROM_SERVER){
+        /* determine the accumulated error to apply to this frame. Apply
+         * more of the error when we've been undershooting, less when
+         * we've been overshooting
+         */
+        long long adjust;
+        int bitrate_error;
+
+        bitrate_error = cpi->av_per_frame_bandwidth
+                        - cpi->buffered_av_per_frame_bandwidth;
+
+        adjust = cpi->accumulated_overshoot;
+        adjust *= cpi->av_per_frame_bandwidth + bitrate_error;
+        adjust /= cpi->oxcf.maximum_buffer_size;
+        if (adjust > (cpi->this_frame_target - min_frame_target))
+            adjust = (cpi->this_frame_target - min_frame_target);
+        else if (adjust < 0)
+            adjust = 0;
+
+        cpi->this_frame_target -= adjust;
+        cpi->accumulated_overshoot -= adjust;
+    }
+
+    if(cpi->this_frame_target > max_frame_target)
+        cpi->this_frame_target = max_frame_target;
 }