diff --git a/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/actions/IndentAction.java b/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/actions/IndentAction.java
index 3403675f043..58327b2f1f3 100644
--- a/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/actions/IndentAction.java
+++ b/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/actions/IndentAction.java
@@ -275,7 +275,10 @@ public class IndentAction extends TextEditorAction {
 		// then just shift to the right
 		if (fIsTabAction && caret == end && whiteSpaceLength(currentIndent) >= whiteSpaceLength(indent)) {
 			int indentWidth= whiteSpaceLength(currentIndent) + getIndentSize();
-			String replacement= IndentUtil.changePrefix(currentIndent.trim(), indentWidth, getTabSize(), useSpaces());
+			if (useTabsAndSpaces()) {
+				currentIndent = trimSpacesRight(currentIndent);
+			}
+			String replacement= IndentUtil.changePrefix(currentIndent, indentWidth, getTabSize(), useSpaces());
 			document.replace(offset, length, replacement);
 			fCaretOffset= offset + replacement.length();
 			return true;
@@ -295,6 +298,20 @@ public class IndentAction extends TextEditorAction {
 		return false;
 	}
 
+	/**
+	 * Strip trailing space characters.
+	 * 
+	 * @param indent
+	 * @return string with trailing spaces removed
+	 */
+	private String trimSpacesRight(String indent) {
+		int i = indent.length() - 1;
+		while (i >= 0 && indent.charAt(i) == ' ') {
+			--i;
+		}
+		return indent.substring(0, i+1);
+	}
+
 	/**
 	 * Computes and returns the indentation for a block comment line.
 	 * 
@@ -345,6 +362,16 @@ public class IndentAction extends TextEditorAction {
 		return CCorePlugin.SPACE.equals(getCoreFormatterOption(DefaultCodeFormatterConstants.FORMATTER_TAB_CHAR));
 	}
 	
+	/**
+	 * Returns whether mixed tabs/spaces should be used for indentation, depending on the editor and
+	 * formatter preferences.
+	 * 
+	 * @return <code>true</code> if tabs and spaces should be used
+	 */
+	private boolean useTabsAndSpaces() {
+		return DefaultCodeFormatterConstants.MIXED.equals(getCoreFormatterOption(DefaultCodeFormatterConstants.FORMATTER_TAB_CHAR));
+	}
+	
 	/**
 	 * Returns the tab size used by the editor, which is deduced from the
 	 * formatter preferences.
diff --git a/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/editor/CEditor.java b/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/editor/CEditor.java
index 703af01b0aa..4d56b99a14d 100644
--- a/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/editor/CEditor.java
+++ b/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/editor/CEditor.java
@@ -77,7 +77,6 @@ import org.eclipse.jface.text.ITypedRegion;
 import org.eclipse.jface.text.IWidgetTokenKeeper;
 import org.eclipse.jface.text.Position;
 import org.eclipse.jface.text.Region;
-import org.eclipse.jface.text.TabsToSpacesConverter;
 import org.eclipse.jface.text.TextUtilities;
 import org.eclipse.jface.text.contentassist.ContentAssistant;
 import org.eclipse.jface.text.contentassist.IContentAssistant;
@@ -217,6 +216,7 @@ import org.eclipse.cdt.internal.ui.text.CWordIterator;
 import org.eclipse.cdt.internal.ui.text.DocumentCharacterIterator;
 import org.eclipse.cdt.internal.ui.text.ICReconcilingListener;
 import org.eclipse.cdt.internal.ui.text.Symbols;
+import org.eclipse.cdt.internal.ui.text.TabsToSpacesConverter;
 import org.eclipse.cdt.internal.ui.text.c.hover.SourceViewerInformationControl;
 import org.eclipse.cdt.internal.ui.text.contentassist.ContentAssistPreference;
 import org.eclipse.cdt.internal.ui.util.CUIHelp;
@@ -1640,8 +1640,8 @@ public class CEditor extends TextEditor implements ISelectionChangedListener, IC
 					int tabWidth= getSourceViewerConfiguration().getTabWidth(asv);
 					if (textWidget.getTabs() != tabWidth)
 						textWidget.setTabs(tabWidth);
+					uninstallTabsToSpacesConverter();
 					if (isTabsToSpacesConversionEnabled()) {
-						uninstallTabsToSpacesConverter();
 						installTabsToSpacesConverter();
 					} else {
 						updateIndentationMode();
diff --git a/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/text/TabsToSpacesConverter.java b/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/text/TabsToSpacesConverter.java
new file mode 100644
index 00000000000..b516056eda2
--- /dev/null
+++ b/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/text/TabsToSpacesConverter.java
@@ -0,0 +1,114 @@
+/*******************************************************************************
+ * Copyright (c) 2010 Wind River Systems, Inc. and others.
+ * All rights reserved. This program and the accompanying materials
+ * are made available under the terms of the Eclipse Public License v1.0
+ * which accompanies this distribution, and is available at
+ * http://www.eclipse.org/legal/epl-v10.html
+ *
+ * Contributors:
+ *     Wind River Systems - initial API and implementation
+ *******************************************************************************/
+package org.eclipse.cdt.internal.ui.text;
+
+import org.eclipse.jface.text.BadLocationException;
+import org.eclipse.jface.text.DocumentCommand;
+import org.eclipse.jface.text.IAutoEditStrategy;
+import org.eclipse.jface.text.IDocument;
+import org.eclipse.jface.text.ILineTracker;
+import org.eclipse.jface.text.IRegion;
+
+/**
+ * Auto edit strategy that converts tabs into spaces.
+ * <p>
+ * This class is derived from the platform version adding a fix for bug 306333.
+ * Can be removed when the bug is fixed.
+ * </p>
+ * @see org.eclipse.jface.text.TabsToSpacesConverter
+ */
+public class TabsToSpacesConverter implements IAutoEditStrategy {
+
+	private int fTabRatio;
+	private ILineTracker fLineTracker;
+
+
+	public void setNumberOfSpacesPerTab(int ratio) {
+		fTabRatio= ratio;
+	}
+
+	public void setLineTracker(ILineTracker lineTracker) {
+		fLineTracker= lineTracker;
+	}
+
+	private int insertTabString(StringBuffer buffer, int offsetInLine) {
+
+		if (fTabRatio == 0)
+			return 0;
+
+		int remainder= offsetInLine % fTabRatio;
+		remainder= fTabRatio - remainder;
+		for (int i= 0; i < remainder; i++)
+			buffer.append(' ');
+		return remainder;
+	}
+
+	public void customizeDocumentCommand(IDocument document, DocumentCommand command) {
+		String text= command.text;
+		if (text == null)
+			return;
+
+		int index= text.indexOf('\t');
+		if (index > -1) {
+
+			StringBuffer buffer= new StringBuffer();
+
+			fLineTracker.set(command.text);
+			int lines= fLineTracker.getNumberOfLines();
+
+			try {
+
+				for (int i= 0; i < lines; i++) {
+
+					int offset= fLineTracker.getLineOffset(i);
+					int endOffset= offset + fLineTracker.getLineLength(i);
+					String line= text.substring(offset, endOffset);
+
+					int position= 0;
+					if (i == 0) {
+						IRegion firstLine= document.getLineInformationOfOffset(command.offset);
+						position= computeVisualLength(document.get(firstLine.getOffset(), command.offset - firstLine.getOffset()));
+					}
+
+					int length= line.length();
+					for (int j= 0; j < length; j++) {
+						char c= line.charAt(j);
+						if (c == '\t') {
+							position += insertTabString(buffer, position);
+						} else {
+							buffer.append(c);
+							++ position;
+						}
+					}
+
+				}
+
+				command.text= buffer.toString();
+
+			} catch (BadLocationException x) {
+			}
+		}
+	}
+
+	private int computeVisualLength(String text) {
+		int length = text.length();
+		int offset = 0;
+		for (int i=0; i < length; ++i) {
+			if (text.charAt(i) == '\t') {
+				if (fTabRatio != 0)
+					offset += fTabRatio - offset % fTabRatio;
+			} else {
+				++offset;
+			}
+		}
+		return offset;
+	}
+}