diff --git a/git-submodule.sh b/git-submodule.sh
index 9bb2e13e929c824a75c648966aaaa61672b9c445..efc86ad4e0b90edbbf5a927aa87e7ad4b1a1949e 100755
--- a/git-submodule.sh
+++ b/git-submodule.sh
@@ -132,46 +132,46 @@ module_clone()
 	gitdir_base=
 	name=$(module_name "$path" 2>/dev/null)
 	test -n "$name" || name="$path"
-	base_path=$(dirname "$path")
+	base_name=$(dirname "$name")
 
 	gitdir=$(git rev-parse --git-dir)
-	gitdir_base="$gitdir/modules/$base_path"
-	gitdir="$gitdir/modules/$path"
-
-	case $gitdir in
-	/*)
-		a="$(cd_to_toplevel && pwd)/"
-		b=$gitdir
-		while [ "$b" ] && [ "${a%%/*}" = "${b%%/*}" ]
-		do
-			a=${a#*/} b=${b#*/};
-		done
-
-		rel="$a$name"
-		rel=`echo $rel | sed -e 's|[^/]*|..|g'`
-		rel_gitdir="$rel/$b"
-		;;
-	*)
-		rel=`echo $name | sed -e 's|[^/]*|..|g'`
-		rel_gitdir="$rel/$gitdir"
-		;;
-	esac
+	gitdir_base="$gitdir/modules/$base_name"
+	gitdir="$gitdir/modules/$name"
 
 	if test -d "$gitdir"
 	then
 		mkdir -p "$path"
-		echo "gitdir: $rel_gitdir" >"$path/.git"
 		rm -f "$gitdir/index"
 	else
 		mkdir -p "$gitdir_base"
-		if test -n "$reference"
-		then
-			git-clone $quiet "$reference" -n "$url" "$path" --separate-git-dir "$gitdir"
-		else
-			git-clone $quiet -n "$url" "$path" --separate-git-dir "$gitdir"
-		fi ||
+		git clone $quiet -n ${reference:+"$reference"} \
+			--separate-git-dir "$gitdir" "$url" "$path" ||
 		die "$(eval_gettext "Clone of '\$url' into submodule path '\$path' failed")"
 	fi
+
+	a=$(cd "$gitdir" && pwd)/
+	b=$(cd "$path" && pwd)/
+	# normalize Windows-style absolute paths to POSIX-style absolute paths
+	case $a in [a-zA-Z]:/*) a=/${a%%:*}${a#*:} ;; esac
+	case $b in [a-zA-Z]:/*) b=/${b%%:*}${b#*:} ;; esac
+	# Remove all common leading directories after a sanity check
+	if test "${a#$b}" != "$a" || test "${b#$a}" != "$b"; then
+		die "$(eval_gettext "Gitdir '\$a' is part of the submodule path '\$b' or vice versa")"
+	fi
+	while test "${a%%/*}" = "${b%%/*}"
+	do
+		a=${a#*/}
+		b=${b#*/}
+	done
+	# Now chop off the trailing '/'s that were added in the beginning
+	a=${a%/}
+	b=${b%/}
+
+	rel=$(echo $b | sed -e 's|[^/]*|..|g')
+	echo "gitdir: $rel/$a" >"$path/.git"
+
+	rel=$(echo $a | sed -e 's|[^/]*|..|g')
+	(clear_local_git_env; cd "$path" && GIT_WORK_TREE=. git config core.worktree "$rel/$b")
 }
 
 #
diff --git a/t/t7400-submodule-basic.sh b/t/t7400-submodule-basic.sh
index 695f7afdf31cc589e9c31d764d1e713ad64240c0..b377a7af28c9dde11bd4cf6adcf0d7eae31a0754 100755
--- a/t/t7400-submodule-basic.sh
+++ b/t/t7400-submodule-basic.sh
@@ -79,6 +79,15 @@ test_expect_success 'submodule add' '
 		cd addtest &&
 		git submodule add -q "$submodurl" submod >actual &&
 		test ! -s actual &&
+		echo "gitdir: ../.git/modules/submod" >expect &&
+		test_cmp expect submod/.git &&
+		(
+			cd submod &&
+			git config core.worktree >actual &&
+			echo "../../../submod" >expect &&
+			test_cmp expect actual &&
+			rm -f actual expect
+		) &&
 		git submodule init
 	) &&
 
@@ -498,4 +507,17 @@ test_expect_success 'relative path works with user@host:path' '
 	)
 '
 
+test_expect_success 'moving the superproject does not break submodules' '
+	(
+		cd addtest &&
+		git submodule status >expect
+	)
+	mv addtest addtest2 &&
+	(
+		cd addtest2 &&
+		git submodule status >actual &&
+		test_cmp expect actual
+	)
+'
+
 test_done
diff --git a/t/t7406-submodule-update.sh b/t/t7406-submodule-update.sh
index 5b97222c48a15dff018cb814ca14c59ed0ee91a2..dcb195b4cf67af3cf5ce94d0f5ca75bf94664b9a 100755
--- a/t/t7406-submodule-update.sh
+++ b/t/t7406-submodule-update.sh
@@ -619,4 +619,21 @@ test_expect_success 'submodule add properly re-creates deeper level submodules'
 	)
 '
 
+test_expect_success 'submodule update properly revives a moved submodule' '
+	(cd super &&
+	 git commit -am "pre move" &&
+	 git status >expect&&
+	 H=$(cd submodule2; git rev-parse HEAD) &&
+	 git rm --cached submodule2 &&
+	 rm -rf submodule2 &&
+	 mkdir -p "moved/sub module" &&
+	 git update-index --add --cacheinfo 160000 $H "moved/sub module" &&
+	 git config -f .gitmodules submodule.submodule2.path "moved/sub module"
+	 git commit -am "post move" &&
+	 git submodule update &&
+	 git status >actual &&
+	 test_cmp expect actual
+	)
+'
+
 test_done