diff --git a/PowerEditor/src/WinControls/ProjectPanel/ProjectPanel.cpp b/PowerEditor/src/WinControls/ProjectPanel/ProjectPanel.cpp
index e9e3ad14..21e50401 100644
--- a/PowerEditor/src/WinControls/ProjectPanel/ProjectPanel.cpp
+++ b/PowerEditor/src/WinControls/ProjectPanel/ProjectPanel.cpp
@@ -302,7 +302,8 @@ bool ProjectPanel::saveWorkSpace()
 bool ProjectPanel::writeWorkSpace(TCHAR *projectFileName)
 {
     //write <NotepadPlus>: use the default file name if new file name is not given
-	TiXmlDocument projDoc(projectFileName?projectFileName:_workSpaceFilePath.c_str());
+	const TCHAR * fn2write = projectFileName?projectFileName:_workSpaceFilePath.c_str();
+	TiXmlDocument projDoc(fn2write);
     TiXmlNode *root = projDoc.InsertEndChild(TiXmlElement(TEXT("NotepadPlus")));
 
 	TCHAR textBuffer[MAX_PATH];
@@ -326,13 +327,13 @@ bool ProjectPanel::writeWorkSpace(TCHAR *projectFileName)
 
 		TiXmlNode *projRoot = root->InsertEndChild(TiXmlElement(TEXT("Project")));
 		projRoot->ToElement()->SetAttribute(TEXT("name"), tvItem.pszText);
-		buildProjectXml(projRoot, tvProj);
+		buildProjectXml(projRoot, tvProj, fn2write);
     }
     projDoc.SaveFile();
 	return true;
 }
 
-void ProjectPanel::buildProjectXml(TiXmlNode *node, HTREEITEM hItem)
+void ProjectPanel::buildProjectXml(TiXmlNode *node, HTREEITEM hItem, const TCHAR* fn2write)
 {
 	TCHAR textBuffer[MAX_PATH];
 	TVITEM tvItem;
@@ -349,18 +350,34 @@ void ProjectPanel::buildProjectXml(TiXmlNode *node, HTREEITEM hItem)
 		if (tvItem.lParam != NULL)
 		{
 			generic_string *fn = (generic_string *)tvItem.lParam;
+			generic_string newFn = getRelativePath(*fn, fn2write);
 			TiXmlNode *fileLeaf = node->InsertEndChild(TiXmlElement(TEXT("File")));
-			fileLeaf->ToElement()->SetAttribute(TEXT("name"), fn->c_str());
+			fileLeaf->ToElement()->SetAttribute(TEXT("name"), newFn.c_str());
 		}
 		else
 		{
 			TiXmlNode *folderNode = node->InsertEndChild(TiXmlElement(TEXT("Folder")));
 			folderNode->ToElement()->SetAttribute(TEXT("name"), tvItem.pszText);
-			buildProjectXml(folderNode, hItemNode);
+			buildProjectXml(folderNode, hItemNode, fn2write);
 		}
 	}
 }
 
+generic_string ProjectPanel::getRelativePath(const generic_string & filePath, const TCHAR *workSpaceFileName)
+{
+	TCHAR wsfn[MAX_PATH];
+	lstrcpy(wsfn, workSpaceFileName);
+	::PathRemoveFileSpec(wsfn);
+
+	size_t pos_found = filePath.find(wsfn);
+	if (pos_found == generic_string::npos)
+		return filePath;
+	const TCHAR *relativeFile = filePath.c_str() + lstrlen(wsfn) + 1;
+	
+	//printStr(relativeFile);
+	return relativeFile;
+}
+
 bool ProjectPanel::buildTreeFrom(TiXmlNode *projectRoot, HTREEITEM hParentItem)
 {
 	for (TiXmlNode *childNode = projectRoot->FirstChildElement();
diff --git a/PowerEditor/src/WinControls/ProjectPanel/ProjectPanel.h b/PowerEditor/src/WinControls/ProjectPanel/ProjectPanel.h
index ac7b9e0f..38fb317c 100644
--- a/PowerEditor/src/WinControls/ProjectPanel/ProjectPanel.h
+++ b/PowerEditor/src/WinControls/ProjectPanel/ProjectPanel.h
@@ -80,7 +80,8 @@ protected:
   BOOL setImageList(int root_clean_id, int root_dirty_id, int project_id, int open_node_id, int closed_node_id, int leaf_id, int ivalid_leaf_id);
   void addFiles(HTREEITEM hTreeItem);
 	bool writeWorkSpace(TCHAR *projectFileName = NULL);
-	void buildProjectXml(TiXmlNode *root, HTREEITEM hItem);
+	generic_string getRelativePath(const generic_string & fn, const TCHAR *workSpaceFileName);
+	void buildProjectXml(TiXmlNode *root, HTREEITEM hItem, const TCHAR* fn2write);
 	NodeType getNodeType(HTREEITEM hItem);
   void setWorkSpaceDirty(bool isDirty);
 	void popupMenuCmd(int cmdID);