diff --git a/doc/bird.sgml b/doc/bird.sgml
index 8dc872e7..c76873cd 100644
--- a/doc/bird.sgml
+++ b/doc/bird.sgml
@@ -2220,9 +2220,9 @@ using the following configuration parameters:
 	the number of hops is 2. Default: enabled for iBGP.
 
 	<tag><label id="bgp-source-address">source address <m/ip/</tag>
-	Define local address we should use for next hop calculation and as a
-	source address for the BGP session. Default: the address of the local
-	end of the interface our neighbor is connected to.
+	Define local address we should use as a source address for the BGP
+	session. Default: the address of the local end of the interface our
+	neighbor is connected to.
 
 	<tag><label id="bgp-strict-bind">strict bind <m/switch/</tag>
 	Specify whether BGP listening socket should be bound to a specific local
@@ -2565,19 +2565,29 @@ be used in explicit configuration.
 <p>BGP channels have additional config options (together with the common ones):
 
 <descrip>
-	<tag><label id="bgp-next-hop-keep">next hop keep</tag>
-	Forward the received Next Hop attribute even in situations where the
-	local address should be used instead, like when the route is sent to an
-	interface with a different subnet. Default: disabled.
+	<tag><label id="bgp-next-hop-keep">next hop keep <m/switch/|ibgp|ebgp</tag>
+	Do not modify the Next Hop attribute and advertise the current one
+	unchanged even in cases where our own local address should be used
+	instead. This is necessary when the BGP speaker does not forward network
+	traffic (route servers and some route reflectors) and also can be useful
+	in some other cases (e.g. multihop EBGP sessions). Can be enabled for
+	all routes, or just for routes received from IBGP / EBGP neighbors.
+	Default: disabled for regular BGP, enabled for route servers,
+	<cf/ibgp/ for route reflectors.
 
-	<tag><label id="bgp-next-hop-self">next hop self</tag>
-	Avoid calculation of the Next Hop attribute and always advertise our own
-	source address as a next hop. This needs to be used only occasionally to
-	circumvent misconfigurations of other routers. Default: disabled.
+	<tag><label id="bgp-next-hop-self">next hop self <m/switch/|ibgp|ebgp</tag>
+	Always advertise our own local address as a next hop, even in cases
+	where the current Next Hop attribute should be used unchanged. This is
+	sometimes used for routes propagated from EBGP to IBGP when IGP routing
+	does not cover inter-AS links, therefore IP addreses of EBGP neighbors
+	are not resolvable through IGP. Can be enabled for all routes, or just
+	for routes received from IBGP / EBGP neighbors. Default: disabled.
 
 	<tag><label id="bgp-next-hop-address">next hop address <m/ip/</tag>
-	Avoid calculation of the Next Hop attribute and always advertise this address
-	as a next hop.
+	Specify which address to use when our own local address should be
+	announced in the Next Hop attribute. Default: the source address of the
+	BGP session (if acceptable), or the preferred address of an associated
+	interface.
 
 	<tag><label id="bgp-missing-lladdr">missing lladdr self|drop|ignore</tag>
 	Next Hop attribute in BGP-IPv6 sometimes contains just the global IPv6
@@ -2618,7 +2628,7 @@ be used in explicit configuration.
 	the channel is connected to (if eligible).
 
 	<tag><label id="bgp-import-table">import table <m/switch/</tag>
-	A BGP import table contain all received routes from given BGP neighbor,
+	A BGP import table contains all received routes from given BGP neighbor,
 	before application of import filters. It is also called <em/Adj-RIB-In/
 	in BGP terminology. BIRD BGP by default operates without import tables,
 	in which case received routes are just processed by import filters,
diff --git a/proto/bgp/bgp.c b/proto/bgp/bgp.c
index ae4a1b0a..fb6c9881 100644
--- a/proto/bgp/bgp.c
+++ b/proto/bgp/bgp.c
@@ -1814,6 +1814,10 @@ bgp_postconfig(struct proto_config *CF)
     if ((cc->c.in_limit.action == PLA_RESTART) && cf->disable_after_error)
       cc->c.in_limit.action = PLA_DISABLE;
 
+    /* Different default based on rr_client, rs_client */
+    if (cc->next_hop_keep == 0xff)
+      cc->next_hop_keep = cf->rr_client ? NH_IBGP : (cf->rs_client ? NH_ALL : NH_NO);
+
     /* Different default based on rs_client */
     if (!cc->missing_lladdr)
       cc->missing_lladdr = cf->rs_client ? MLL_IGNORE : MLL_SELF;
diff --git a/proto/bgp/bgp.h b/proto/bgp/bgp.h
index 76b835fa..2b60f90f 100644
--- a/proto/bgp/bgp.h
+++ b/proto/bgp/bgp.h
@@ -134,8 +134,8 @@ struct bgp_channel_config {
   const struct bgp_af_desc *desc;
 
   ip_addr next_hop_addr;		/* Local address for NEXT_HOP attribute */
-  u8 next_hop_self;			/* Always set next hop to local IP address */
-  u8 next_hop_keep;			/* Do not touch next hop attribute */
+  u8 next_hop_self;			/* Always set next hop to local IP address (NH_*) */
+  u8 next_hop_keep;			/* Do not modify next hop attribute (NH_*) */
   u8 missing_lladdr;			/* What we will do when we don' know link-local addr, see MLL_* */
   u8 gw_mode;				/* How we compute route gateway from next_hop attr, see GW_* */
   u8 secondary;				/* Accept also non-best routes (i.e. RA_ACCEPTED) */
@@ -151,12 +151,17 @@ struct bgp_channel_config {
   struct rtable_config *igp_table_ip6;	/* Table for recursive IPv6 next hop lookups */
 };
 
-#define MLL_SELF 1
-#define MLL_DROP 2
-#define MLL_IGNORE 3
+#define NH_NO			0
+#define NH_ALL			1
+#define NH_IBGP			2
+#define NH_EBGP			3
 
-#define GW_DIRECT 1
-#define GW_RECURSIVE 2
+#define MLL_SELF		1
+#define MLL_DROP		2
+#define MLL_IGNORE		3
+
+#define GW_DIRECT		1
+#define GW_RECURSIVE		2
 
 #define BGP_ADD_PATH_RX		1
 #define BGP_ADD_PATH_TX		2
diff --git a/proto/bgp/config.Y b/proto/bgp/config.Y
index f155eee2..ac8d024a 100644
--- a/proto/bgp/config.Y
+++ b/proto/bgp/config.Y
@@ -29,8 +29,9 @@ CF_KEYWORDS(BGP, LOCAL, NEIGHBOR, AS, HOLD, TIME, CONNECT, RETRY, KEEPALIVE,
 	SECURITY, DETERMINISTIC, SECONDARY, ALLOW, BFD, ADD, PATHS, RX, TX,
 	GRACEFUL, RESTART, AWARE, CHECK, LINK, PORT, EXTENDED, MESSAGES, SETKEY,
 	STRICT, BIND, CONFEDERATION, MEMBER, MULTICAST, FLOW4, FLOW6, LONG,
-	LIVED, STALE, IMPORT)
+	LIVED, STALE, IMPORT, IBGP, EBGP)
 
+%type <i> bgp_nh
 %type <i32> bgp_afi
 
 CF_KEYWORDS(CEASE, PREFIX, LIMIT, HIT, ADMINISTRATIVE, SHUTDOWN, RESET, PEER,
@@ -205,17 +206,23 @@ bgp_channel_start: bgp_afi
     BGP_CC->c.ra_mode = RA_UNDEF;
     BGP_CC->afi = $1;
     BGP_CC->desc = desc;
+    BGP_CC->next_hop_keep = 0xff; /* undefined */
     BGP_CC->gr_able = 0xff;	/* undefined */
     BGP_CC->llgr_able = 0xff;	/* undefined */
     BGP_CC->llgr_time = ~0U;	/* undefined */
   }
 };
 
+bgp_nh:
+   bool { $$ = $1; }
+ | IBGP { $$ = NH_IBGP; }
+ | EBGP { $$ = NH_EBGP; }
+
 bgp_channel_item:
    channel_item
  | NEXT HOP ADDRESS ipa { BGP_CC->next_hop_addr = $4; }
- | NEXT HOP SELF { BGP_CC->next_hop_self = 1; BGP_CC->next_hop_keep = 0; }
- | NEXT HOP KEEP { BGP_CC->next_hop_keep = 1; BGP_CC->next_hop_self = 0; }
+ | NEXT HOP SELF bgp_nh { BGP_CC->next_hop_self = $4; }
+ | NEXT HOP KEEP bgp_nh { BGP_CC->next_hop_keep = $4; }
  | MISSING LLADDR SELF { BGP_CC->missing_lladdr = MLL_SELF; }
  | MISSING LLADDR DROP { BGP_CC->missing_lladdr = MLL_DROP; }
  | MISSING LLADDR IGNORE { BGP_CC->missing_lladdr = MLL_IGNORE; }
diff --git a/proto/bgp/packets.c b/proto/bgp/packets.c
index e7089eba..26716573 100644
--- a/proto/bgp/packets.c
+++ b/proto/bgp/packets.c
@@ -851,6 +851,19 @@ bgp_apply_mpls_labels(struct bgp_parse_state *s, rta *a, u32 *labels, uint lnum)
 }
 
 
+static int
+bgp_match_src(struct bgp_export_state *s, int mode)
+{
+  switch (mode)
+  {
+  case NH_NO:		return 0;
+  case NH_ALL:		return 1;
+  case NH_IBGP:		return s->src && s->src->is_internal;
+  case NH_EBGP:		return s->src && !s->src->is_internal;
+  default:		return 0;
+  }
+}
+
 static inline int
 bgp_use_next_hop(struct bgp_export_state *s, eattr *a)
 {
@@ -858,10 +871,12 @@ bgp_use_next_hop(struct bgp_export_state *s, eattr *a)
   struct bgp_channel *c = s->channel;
   ip_addr *nh = (void *) a->u.ptr->data;
 
-  if (s->channel->cf->next_hop_self)
+  /* Handle next hop self option */
+  if (c->cf->next_hop_self && bgp_match_src(s, c->cf->next_hop_self))
     return 0;
 
-  if (s->channel->cf->next_hop_keep)
+  /* Handle next hop keep option */
+  if (c->cf->next_hop_keep && bgp_match_src(s, c->cf->next_hop_keep))
     return 1;
 
   /* Keep it when explicitly set in export filter */
@@ -888,7 +903,8 @@ bgp_use_gateway(struct bgp_export_state *s)
   struct bgp_channel *c = s->channel;
   rta *ra = s->route->attrs;
 
-  if (s->channel->cf->next_hop_self)
+  /* Handle next hop self option - also applies to gateway */
+  if (c->cf->next_hop_self && bgp_match_src(s, c->cf->next_hop_self))
     return 0;
 
   /* We need one valid global gateway */