diff --git a/core/org.eclipse.cdt.core.tests/misc/org/eclipse/cdt/core/internal/errorparsers/tests/ErrorParserFileMatchingTest.java b/core/org.eclipse.cdt.core.tests/misc/org/eclipse/cdt/core/internal/errorparsers/tests/ErrorParserFileMatchingTest.java
index 124e49667cc..5d7f1e6cb42 100644
--- a/core/org.eclipse.cdt.core.tests/misc/org/eclipse/cdt/core/internal/errorparsers/tests/ErrorParserFileMatchingTest.java
+++ b/core/org.eclipse.cdt.core.tests/misc/org/eclipse/cdt/core/internal/errorparsers/tests/ErrorParserFileMatchingTest.java
@@ -28,6 +28,7 @@ import org.eclipse.cdt.core.errorparsers.ErrorPattern;
 import org.eclipse.cdt.core.testplugin.CTestPlugin;
 import org.eclipse.core.internal.registry.ExtensionRegistry;
 import org.eclipse.core.resources.IFile;
+import org.eclipse.core.resources.IFolder;
 import org.eclipse.core.resources.IProject;
 import org.eclipse.core.resources.IResource;
 import org.eclipse.core.resources.ResourcesPlugin;
@@ -1121,4 +1122,119 @@ public class ErrorParserFileMatchingTest extends TestCase {
 		assertEquals("error",problemMarkerInfo.description);
 	}
 
+	/**
+	 * Checks if a file from error output can be found.
+	 *
+	 * @throws Exception...
+	 */
+	public void testPushDirectory() throws Exception {
+		String fileName = "testPushDirectory.c";
+		ResourceHelper.createFolder(fProject, "Folder");
+		ResourceHelper.createFile(fProject, fileName);
+		ResourceHelper.createFile(fProject, "Folder/"+fileName);
+
+		String lines = "make[0]: Entering directory `Folder'\n"
+			+ fileName+":1:error\n";
+
+		String[] errorParsers = {MAKE_ERRORPARSER_ID, mockErrorParserId };
+		parseOutput(fProject, fProject.getLocation(), errorParsers, lines);
+		assertEquals(1, errorList.size());
+
+		ProblemMarkerInfo problemMarkerInfo = errorList.get(0);
+		assertEquals("L/FindMatchingFilesTest/Folder/"+fileName,problemMarkerInfo.file.toString());
+		assertEquals(1,problemMarkerInfo.lineNumber);
+		assertEquals("error",problemMarkerInfo.description);
+	}
+
+	/**
+	 * Checks if a file from error output can be found.
+	 *
+	 * @throws Exception...
+	 */
+	public void testPushAbsoluteDirectory() throws Exception {
+		String fileName = "testPushAbsoluteDirectory.c";
+		IFolder folder = ResourceHelper.createFolder(fProject, "Folder");
+		ResourceHelper.createFile(fProject, fileName);
+		ResourceHelper.createFile(fProject, "Folder/"+fileName);
+
+		IPath absoluteDir = folder.getLocation();
+		Assert.assertTrue(absoluteDir.isAbsolute());
+
+		String lines = "make[0]: Entering directory `" + absoluteDir + "'\n"
+			+ fileName+":1:error\n";
+
+		String[] errorParsers = {MAKE_ERRORPARSER_ID, mockErrorParserId };
+		parseOutput(fProject, fProject.getLocation(), errorParsers, lines);
+		assertEquals(1, errorList.size());
+
+		ProblemMarkerInfo problemMarkerInfo = errorList.get(0);
+		assertEquals("L/FindMatchingFilesTest/Folder/"+fileName,problemMarkerInfo.file.toString());
+		assertEquals(1,problemMarkerInfo.lineNumber);
+		assertEquals("error",problemMarkerInfo.description);
+	}
+
+	/**
+	 * Checks if a file from error output can be found.
+	 *
+	 * @throws Exception...
+	 */
+	public void testPopDirectory() throws Exception {
+		String fileName = "testPopDirectory.c";
+
+		ResourceHelper.createFolder(fProject, "Folder");
+		ResourceHelper.createFolder(fProject, "Folder/SubFolder");
+
+		ResourceHelper.createFile(fProject, fileName);
+		ResourceHelper.createFile(fProject, "Folder/"+fileName);
+		ResourceHelper.createFile(fProject, "Folder/SubFolder/"+fileName);
+
+		String lines = "make[1]: Entering directory `Folder'\n"
+			+ "make[2]: Entering directory `SubFolder'\n"
+			+ "make[2]: Leaving directory `SubFolder'\n"
+			+ fileName+":1:error\n";
+
+		String[] errorParsers = {MAKE_ERRORPARSER_ID, mockErrorParserId };
+		parseOutput(fProject, fProject.getLocation(), errorParsers, lines);
+		assertEquals(1, errorList.size());
+
+		ProblemMarkerInfo problemMarkerInfo = errorList.get(0);
+		assertEquals("L/FindMatchingFilesTest/Folder/"+fileName,problemMarkerInfo.file.toString());
+		assertEquals(1,problemMarkerInfo.lineNumber);
+		assertEquals("error",problemMarkerInfo.description);
+	}
+
+	/**
+	 * Checks if a file from error output can be found.
+	 *
+	 * @throws Exception...
+	 */
+	public void testPushDirectoryAndCache() throws Exception {
+		String fileName = "testPushDirectoryCacheProblem.c";
+		ResourceHelper.createFolder(fProject, "Folder");
+		ResourceHelper.createFile(fProject, fileName);
+		ResourceHelper.createFile(fProject, "Folder/"+fileName);
+
+		String lines = fileName+":1:error\n"
+			+ "make[0]: Entering directory `Folder'\n"
+			+ fileName+":1:error\n";
+
+		String[] errorParsers = {MAKE_ERRORPARSER_ID, mockErrorParserId };
+		parseOutput(fProject, fProject.getLocation(), errorParsers, lines);
+		assertEquals(2, errorList.size());
+
+		{
+			ProblemMarkerInfo problemMarkerInfo = errorList.get(0);
+			assertEquals("L/FindMatchingFilesTest/"+fileName,problemMarkerInfo.file.toString());
+			assertEquals(1,problemMarkerInfo.lineNumber);
+			assertEquals("error",problemMarkerInfo.description);
+		}
+
+		{
+			ProblemMarkerInfo problemMarkerInfo = errorList.get(1);
+			assertEquals("L/FindMatchingFilesTest/Folder/"+fileName,problemMarkerInfo.file.toString());
+			assertEquals(1,problemMarkerInfo.lineNumber);
+			assertEquals("error",problemMarkerInfo.description);
+		}
+	}
+
 }
diff --git a/core/org.eclipse.cdt.core/src/org/eclipse/cdt/core/ErrorParserManager.java b/core/org.eclipse.cdt.core/src/org/eclipse/cdt/core/ErrorParserManager.java
index 22593c1b8b3..3da93073867 100644
--- a/core/org.eclipse.cdt.core/src/org/eclipse/cdt/core/ErrorParserManager.java
+++ b/core/org.eclipse.cdt.core/src/org/eclipse/cdt/core/ErrorParserManager.java
@@ -54,7 +54,7 @@ public class ErrorParserManager extends OutputStream {
 	private ArrayList<ProblemMarkerInfo> fErrors;
 
 	private Vector<IPath> fDirectoryStack;
-	private IPath fBaseDirectory;
+	private final IPath fBaseDirectory;
 
 	private String previousLine;
 	private OutputStream outputStream;
@@ -65,6 +65,7 @@ public class ErrorParserManager extends OutputStream {
 	private boolean hasErrors = false;
 
 	private String cachedFileName = null;
+	private IPath cachedWorkingDirectory = null;
 	private IFile cachedFile = null;
 
 	private static boolean isCygwin = true;
@@ -155,14 +156,10 @@ public class ErrorParserManager extends OutputStream {
 	 */
 	public void pushDirectory(IPath dir) {
 		if (dir != null) {
-			IPath pwd = null;
-			if (fBaseDirectory.isPrefixOf(dir)) {
-				int segments = fBaseDirectory.matchingFirstSegments(dir);
-				pwd = dir.removeFirstSegments(segments);
-			} else {
-				pwd = dir;
-			}
-			fDirectoryStack.addElement(pwd);
+			if (dir.isAbsolute())
+				fDirectoryStack.addElement(dir);
+			else
+				fDirectoryStack.addElement(getWorkingDirectory().append(dir));
 		}
 	}
 
@@ -266,7 +263,7 @@ public class ErrorParserManager extends OutputStream {
 	 * @return - file in the workspace or {@code null}.
 	 */
 	public IFile findFileName(String fileName) {
-		if (fileName.equals(cachedFileName))
+		if (fileName.equals(cachedFileName) && getWorkingDirectory().equals(cachedWorkingDirectory))
 			return cachedFile;
 
 		IPath path = new Path(fileName);
@@ -290,6 +287,7 @@ public class ErrorParserManager extends OutputStream {
 		}
 
 		cachedFileName = fileName;
+		cachedWorkingDirectory = getWorkingDirectory();
 		cachedFile = file;
 		return file;
 	}
@@ -430,7 +428,6 @@ public class ErrorParserManager extends OutputStream {
 		if (nOpens > 0 && --nOpens == 0) {
 			checkLine(true);
 			fDirectoryStack.removeAllElements();
-			fBaseDirectory = null;
 			if (outputStream != null)
 				outputStream.close();
 		}