diff --git a/doc_src/doc.hdr b/doc_src/doc.hdr
index 64b165e5e..e1ef257ce 100644
--- a/doc_src/doc.hdr
+++ b/doc_src/doc.hdr
@@ -915,17 +915,11 @@ The default \c fish prompt is
 <p>
 <pre>
 function fish_prompt -d "Write out the prompt"
-	printf '\%s\@\%s\%s\\n\%s\%s\\n> ' (whoami) (hostname|cut -d . -f 1) (set_color \$fish_color_cwd) (prompt_pwd) (set_color normal)
+	printf '\%s\@\%s\%s\%s\%s> ' (whoami) (hostname|cut -d . -f 1) (set_color \$fish_color_cwd) (prompt_pwd) (set_color normal)
 end
 </pre>
 </p>
 
-If you are using \c set_color or other commands that output escape
-codes to change the font settings of the terminal, you must always and
-every such sequence with a newline. This is needed since fish needs to
-know that exact length of the prompt in order to tetect when the
-cursor reaches the end of the line. Any newlines in the output of the
-\c fish_prompt command are ignored.
 
 \subsection title Programmable title
 
diff --git a/init/fish_interactive.fish.in b/init/fish_interactive.fish.in
index fc55b7785..11c2f08f0 100644
--- a/init/fish_interactive.fish.in
+++ b/init/fish_interactive.fish.in
@@ -29,7 +29,7 @@ end
 # long it is.
 
 function fish_prompt -d "Write out the prompt"
-	printf '%s@%s \n%s\n%s\n%s\n> ' (whoami) (hostname|cut -d . -f 1) (set_color $fish_color_cwd) (prompt_pwd) (set_color normal)
+	printf '%s@%s %s%s%s> \n' (whoami) (hostname|cut -d . -f 1) (set_color $fish_color_cwd) (prompt_pwd) (set_color normal)
 end
 
 #
diff --git a/output.c b/output.c
index e1e2f8481..4578acb58 100644
--- a/output.c
+++ b/output.c
@@ -128,7 +128,7 @@ void set_color( int c, int c2 )
 	{
 		c = c2 = FISH_COLOR_NORMAL;
 		if( fg )
-			writembs( tparm( set_a_foreground, 0 ) );
+			writembs( tparm( fg, 0 ) );
 		writembs( exit_attribute_mode );
 		return;
 	}
diff --git a/reader.c b/reader.c
index c41839160..e790db3bf 100644
--- a/reader.c
+++ b/reader.c
@@ -620,6 +620,129 @@ void reader_write_title()
 	set_color( FISH_COLOR_RESET, FISH_COLOR_RESET );
 }
 
+/**
+   Tests if the specified narrow character sequence is present at the
+   specified position of the specified wide character string. All of
+   \c seq must match, but str may be longer than seq.
+*/
+static int try_sequence( char *seq, wchar_t *str )
+{
+	int i;
+	
+	for( i=0;; i++ )
+	{
+		if( !seq[i] )
+			return i;
+		
+		if( seq[i] != str[i] )
+			return 0;
+	}
+	
+	return 0;
+}
+
+/**
+   Calculate the width of the specified prompt. Does some clever magic
+   to detect common escape sequences that may be embeded in a prompt,
+   such as color codes.
+*/
+static int calc_prompt_width( array_list_t *arr )
+{
+	int res = 0;
+	int i, j, k;
+	
+	for( i=0; i<al_get_count( arr ); i++ )
+	{
+		wchar_t *next = (wchar_t *)al_get( arr, i );
+		
+		for( j=0; next[j]; j++ )
+		{
+			if( next[j] == L'\e' )
+			{
+				/*
+				  This is the start of an escape code. Try to guess it's width.
+				*/
+				int l;
+				int len=0;
+				int found = 0;
+				
+				/*
+				  Test these color escapes with parameter value 0..7
+				*/
+				char * esc[] = 
+				{
+					set_a_foreground,
+					set_a_background,
+					set_foreground,
+					set_background,
+				}
+				;
+
+				/*
+				  Test these regular escapes without any parameter values
+				*/
+				char *esc2[] =
+				{
+					enter_bold_mode,
+					exit_attribute_mode,
+					enter_underline_mode,
+					exit_underline_mode,
+					enter_standout_mode,
+					exit_standout_mode,
+					flash_screen
+				}
+				;
+				
+				for( l=0; l < (sizeof(esc)/sizeof(char *)) && !found; l++ )
+				{
+					if( !esc[l] )
+						continue;
+					
+					for( k=0; k<8; k++ )
+					{
+						len = try_sequence( tparm(esc[l],k), &next[j] );
+						if( len )
+						{
+							j += (len-1);
+							found = 1;
+							break;
+						}
+					}							
+				}
+				
+				for( l=0; l < (sizeof(esc2)/sizeof(char *)) && !found; l++ )
+				{
+					if( !esc2[l] )
+						continue;
+					/*
+					  Test both padded and unpadded version, just to
+					  be safe. Most versions of tparm don't actually
+					  seem to do anything these days.
+					*/
+					len = maxi( try_sequence( tparm(esc2[l]), &next[j] ),
+								try_sequence( esc2[l], &next[j] ));
+					
+					if( len )
+					{
+						j += (len-1);
+						found = 1;
+					}
+				}
+			}
+			else				
+			{
+				/*
+				  Ordinary decent character. Just add width.
+				*/
+				res += wcwidth( next[j] );
+			}
+			
+		}
+	}
+	return res;
+}
+
+
 /**
    Write the prompt to screen. If data->exec_prompt is set, the prompt
    command is first evaluated, and the title will be reexecuted as
@@ -649,14 +772,8 @@ static void write_prompt()
 				al_init( &prompt_list );
 			}
 		}
-		data->prompt_width=0;
-		for( i=0; i<al_get_count( &prompt_list ); i++ )
-		{
-			wchar_t *next = (wchar_t *)al_get( &prompt_list, i );
-			if( *next == L'\e' )
-				continue;
-			data->prompt_width += my_wcswidth( next );
-		}
+
+		data->prompt_width=calc_prompt_width( &prompt_list );
 
 		data->exec_prompt = 0;
 		reader_write_title();
@@ -2509,9 +2626,7 @@ wchar_t *reader_readline()
 		if( last_char != R_YANK && last_char != R_YANK_POP )
 			yank=0;
 
-		
-
-		switch (c)
+		switch( c )
 		{
 
 			/* go to beginning of line*/