diff --git a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/AdditionalInput.java b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/AdditionalInput.java
index 01c05fd9479..0ac2ec3976f 100644
--- a/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/AdditionalInput.java
+++ b/build/org.eclipse.cdt.managedbuilder.core/src/org/eclipse/cdt/managedbuilder/internal/core/AdditionalInput.java
@@ -337,7 +337,8 @@ public class AdditionalInput implements IAdditionalInput {
 		if (fRebuildState)
 			return fRebuildState;
 		if (fKind.intValue() == IAdditionalInput.KIND_ADDITIONAL_DEPENDENCY
-				|| fKind.intValue() == IAdditionalInput.KIND_ADDITIONAL_INPUT_DEPENDENCY) {
+				|| fKind.intValue() == IAdditionalInput.KIND_ADDITIONAL_INPUT_DEPENDENCY
+				|| isLibrariesInput()) {
 			IToolChain toolChain = getToolChain();
 			if (!toolChain.isExtensionElement()) {
 				long artifactTimeStamp = getArtifactTimeStamp(toolChain);
@@ -395,6 +396,13 @@ public class AdditionalInput implements IAdditionalInput {
 		return 0;
 	}
 
+	private boolean isLibrariesInput() {
+		// libraries are of the "additionalinput" kind, not "additionalinputdependency" because otherwise the
+		// external make builder would generate makefiles with $(LIBS) in the dependency list, resulting in
+		// failure to build dependency -lxyz etc.
+		return (fKind.intValue() == IAdditionalInput.KIND_ADDITIONAL_INPUT && Arrays.asList(getPaths()).contains("$(LIBS)")); //$NON-NLS-1$
+	}
+	
 	private boolean dependencyChanged(String sPath, long artefactTimeStamp) {
 		try {
 			IToolChain toolChain = getToolChain();
diff --git a/build/org.eclipse.cdt.managedbuilder.gnu.ui/plugin.xml b/build/org.eclipse.cdt.managedbuilder.gnu.ui/plugin.xml
index 3fce76a186d..ddc4c317689 100644
--- a/build/org.eclipse.cdt.managedbuilder.gnu.ui/plugin.xml
+++ b/build/org.eclipse.cdt.managedbuilder.gnu.ui/plugin.xml
@@ -176,7 +176,7 @@
             </additionalInput>
             <additionalInput
             	paths="$(LIBS)"
-            	kind="additionalinputdependency">
+            	kind="additionalinput">
             </additionalInput>
          </inputType>
          <outputType
@@ -377,7 +377,7 @@
             </additionalInput>
             <additionalInput
             	paths="$(LIBS)"
-            	kind="additionalinputdependency">
+            	kind="additionalinput">
             </additionalInput>
          </inputType>
          <outputType
@@ -458,7 +458,7 @@
             </additionalInput>
             <additionalInput
             	paths="$(LIBS)"
-            	kind="additionalinputdependency">
+            	kind="additionalinput">
             </additionalInput>
          </inputType>
          <outputType
@@ -746,7 +746,7 @@
             </additionalInput>
             <additionalInput
             	paths="$(LIBS)"
-            	kind="additionalinputdependency">
+            	kind="additionalinput">
             </additionalInput>
          </inputType>
          <outputType
@@ -911,7 +911,7 @@
             </additionalInput>
             <additionalInput
             	paths="$(LIBS)"
-            	kind="additionalinputdependency">
+            	kind="additionalinput">
             </additionalInput>
          </inputType>
          <outputType