diff --git a/git-branch.sh b/git-branch.sh
index c61683033d..bf84b30695 100755
--- a/git-branch.sh
+++ b/git-branch.sh
@@ -121,16 +121,6 @@ then
 	done
 fi
 
-branchdir=$(dirname $branchname)
-while test "$branchdir" != "."
-do
-	if git-show-ref --verify --quiet -- "refs/heads/$branchdir"
-	then
-		die "$branchdir already exists."
-	fi
-	branchdir=$(dirname $branchdir)
-done
-
 prev=''
 if git-show-ref --verify --quiet -- "refs/heads/$branchname"
 then
diff --git a/refs.c b/refs.c
index 3d4cdd1eb9..858c53445c 100644
--- a/refs.c
+++ b/refs.c
@@ -66,12 +66,42 @@ static struct ref_list *add_ref(const char *name, const unsigned char *sha1,
 	return list;
 }
 
+/*
+ * Future: need to be in "struct repository"
+ * when doing a full libification.
+ */
+struct cached_refs {
+	char did_loose;
+	char did_packed;
+	struct ref_list *loose;
+	struct ref_list *packed;
+} cached_refs;
+
+static void free_ref_list(struct ref_list *list)
+{
+	struct ref_list *next;
+	for ( ; list; list = next) {
+		next = list->next;
+		free(list);
+	}
+}
+
+static void invalidate_cached_refs(void)
+{
+	struct cached_refs *ca = &cached_refs;
+
+	if (ca->did_loose && ca->loose)
+		free_ref_list(ca->loose);
+	if (ca->did_packed && ca->packed)
+		free_ref_list(ca->packed);
+	ca->loose = ca->packed = NULL;
+	ca->did_loose = ca->did_packed = 0;
+}
+
 static struct ref_list *get_packed_refs(void)
 {
-	static int did_refs = 0;
-	static struct ref_list *refs = NULL;
-
-	if (!did_refs) {
+	if (!cached_refs.did_packed) {
+		struct ref_list *refs = NULL;
 		FILE *f = fopen(git_path("packed-refs"), "r");
 		if (f) {
 			struct ref_list *list = NULL;
@@ -86,9 +116,10 @@ static struct ref_list *get_packed_refs(void)
 			fclose(f);
 			refs = list;
 		}
-		did_refs = 1;
+		cached_refs.packed = refs;
+		cached_refs.did_packed = 1;
 	}
-	return refs;
+	return cached_refs.packed;
 }
 
 static struct ref_list *get_ref_dir(const char *base, struct ref_list *list)
@@ -138,14 +169,11 @@ static struct ref_list *get_ref_dir(const char *base, struct ref_list *list)
 
 static struct ref_list *get_loose_refs(void)
 {
-	static int did_refs = 0;
-	static struct ref_list *refs = NULL;
-
-	if (!did_refs) {
-		refs = get_ref_dir("refs", NULL);
-		did_refs = 1;
+	if (!cached_refs.did_loose) {
+		cached_refs.loose = get_ref_dir("refs", NULL);
+		cached_refs.did_loose = 1;
 	}
-	return refs;
+	return cached_refs.loose;
 }
 
 /* We allow "recursive" symbolic refs. Only within reason, though */
@@ -378,32 +406,6 @@ int get_ref_sha1(const char *ref, unsigned char *sha1)
 	return read_ref(mkpath("refs/%s", ref), sha1);
 }
 
-int delete_ref(const char *refname, unsigned char *sha1)
-{
-	struct ref_lock *lock;
-	int err, i, ret = 0;
-
-	lock = lock_any_ref_for_update(refname, sha1);
-	if (!lock)
-		return 1;
-	i = strlen(lock->lk->filename) - 5; /* .lock */
-	lock->lk->filename[i] = 0;
-	err = unlink(lock->lk->filename);
-	if (err) {
-		ret = 1;
-		error("unlink(%s) failed: %s",
-		      lock->lk->filename, strerror(errno));
-	}
-	lock->lk->filename[i] = '.';
-
-	err = unlink(lock->log_file);
-	if (err && errno != ENOENT)
-		fprintf(stderr, "warning: unlink(%s) failed: %s",
-			lock->log_file, strerror(errno));
-
-	return ret;
-}
-
 /*
  * Make sure "ref" is something reasonable to have under ".git/refs/";
  * We do not like it if:
@@ -473,26 +475,116 @@ static struct ref_lock *verify_lock(struct ref_lock *lock,
 	return lock;
 }
 
-static struct ref_lock *lock_ref_sha1_basic(const char *ref, const unsigned char *old_sha1)
+static int remove_empty_dir_recursive(char *path, int len)
+{
+	DIR *dir = opendir(path);
+	struct dirent *e;
+	int ret = 0;
+
+	if (!dir)
+		return -1;
+	if (path[len-1] != '/')
+		path[len++] = '/';
+	while ((e = readdir(dir)) != NULL) {
+		struct stat st;
+		int namlen;
+		if ((e->d_name[0] == '.') &&
+		    ((e->d_name[1] == 0) ||
+		     ((e->d_name[1] == '.') && e->d_name[2] == 0)))
+			continue; /* "." and ".." */
+
+		namlen = strlen(e->d_name);
+		if ((len + namlen < PATH_MAX) &&
+		    strcpy(path + len, e->d_name) &&
+		    !lstat(path, &st) &&
+		    S_ISDIR(st.st_mode) &&
+		    remove_empty_dir_recursive(path, len + namlen))
+			continue; /* happy */
+
+		/* path too long, stat fails, or non-directory still exists */
+		ret = -1;
+		break;
+	}
+	closedir(dir);
+	if (!ret) {
+		path[len] = 0;
+		ret = rmdir(path);
+	}
+	return ret;
+}
+
+static int remove_empty_directories(char *file)
+{
+	/* we want to create a file but there is a directory there;
+	 * if that is an empty directory (or a directory that contains
+	 * only empty directories), remove them.
+	 */
+	char path[PATH_MAX];
+	int len = strlen(file);
+
+	if (len >= PATH_MAX) /* path too long ;-) */
+		return -1;
+	strcpy(path, file);
+	return remove_empty_dir_recursive(path, len);
+}
+
+static struct ref_lock *lock_ref_sha1_basic(const char *ref, const unsigned char *old_sha1, int *flag)
 {
 	char *ref_file;
 	const char *orig_ref = ref;
 	struct ref_lock *lock;
 	struct stat st;
+	int last_errno = 0;
 	int mustexist = (old_sha1 && !is_null_sha1(old_sha1));
 
 	lock = xcalloc(1, sizeof(struct ref_lock));
 	lock->lock_fd = -1;
 
-	ref = resolve_ref(ref, lock->old_sha1, mustexist, NULL);
+	ref = resolve_ref(ref, lock->old_sha1, mustexist, flag);
+	if (!ref && errno == EISDIR) {
+		/* we are trying to lock foo but we used to
+		 * have foo/bar which now does not exist;
+		 * it is normal for the empty directory 'foo'
+		 * to remain.
+		 */
+		ref_file = git_path("%s", orig_ref);
+		if (remove_empty_directories(ref_file)) {
+			last_errno = errno;
+			error("there are still refs under '%s'", orig_ref);
+			goto error_return;
+		}
+		ref = resolve_ref(orig_ref, lock->old_sha1, mustexist, flag);
+	}
 	if (!ref) {
-		int last_errno = errno;
+		last_errno = errno;
 		error("unable to resolve reference %s: %s",
 			orig_ref, strerror(errno));
-		unlock_ref(lock);
-		errno = last_errno;
-		return NULL;
+		goto error_return;
 	}
+	if (is_null_sha1(lock->old_sha1)) {
+		/* The ref did not exist and we are creating it.
+		 * Make sure there is no existing ref that is packed
+		 * whose name begins with our refname, nor a ref whose
+		 * name is a proper prefix of our refname.
+		 */
+		int namlen = strlen(ref); /* e.g. 'foo/bar' */
+		struct ref_list *list = get_packed_refs();
+		while (list) {
+			/* list->name could be 'foo' or 'foo/bar/baz' */
+			int len = strlen(list->name);
+			int cmplen = (namlen < len) ? namlen : len;
+			const char *lead = (namlen < len) ? list->name : ref;
+
+			if (!strncmp(ref, list->name, cmplen) &&
+			    lead[cmplen] == '/') {
+				error("'%s' exists; cannot create '%s'",
+				      list->name, ref);
+				goto error_return;
+			}
+			list = list->next;
+		}
+	}
+
 	lock->lk = xcalloc(1, sizeof(struct lock_file));
 
 	lock->ref_name = xstrdup(ref);
@@ -500,11 +592,19 @@ static struct ref_lock *lock_ref_sha1_basic(const char *ref, const unsigned char
 	ref_file = git_path("%s", ref);
 	lock->force_write = lstat(ref_file, &st) && errno == ENOENT;
 
-	if (safe_create_leading_directories(ref_file))
-		die("unable to create directory for %s", ref_file);
+	if (safe_create_leading_directories(ref_file)) {
+		last_errno = errno;
+		error("unable to create directory for %s", ref_file);
+		goto error_return;
+	}
 	lock->lock_fd = hold_lock_file_for_update(lock->lk, ref_file, 1);
 
 	return old_sha1 ? verify_lock(lock, old_sha1, mustexist) : lock;
+
+ error_return:
+	unlock_ref(lock);
+	errno = last_errno;
+	return NULL;
 }
 
 struct ref_lock *lock_ref_sha1(const char *ref, const unsigned char *old_sha1)
@@ -513,12 +613,84 @@ struct ref_lock *lock_ref_sha1(const char *ref, const unsigned char *old_sha1)
 	if (check_ref_format(ref))
 		return NULL;
 	strcpy(refpath, mkpath("refs/%s", ref));
-	return lock_ref_sha1_basic(refpath, old_sha1);
+	return lock_ref_sha1_basic(refpath, old_sha1, NULL);
 }
 
 struct ref_lock *lock_any_ref_for_update(const char *ref, const unsigned char *old_sha1)
 {
-	return lock_ref_sha1_basic(ref, old_sha1);
+	return lock_ref_sha1_basic(ref, old_sha1, NULL);
+}
+
+static int repack_without_ref(const char *refname)
+{
+	struct ref_list *list, *packed_ref_list;
+	int fd;
+	int found = 0;
+	struct lock_file packlock;
+
+	packed_ref_list = get_packed_refs();
+	for (list = packed_ref_list; list; list = list->next) {
+		if (!strcmp(refname, list->name)) {
+			found = 1;
+			break;
+		}
+	}
+	if (!found)
+		return 0;
+	memset(&packlock, 0, sizeof(packlock));
+	fd = hold_lock_file_for_update(&packlock, git_path("packed-refs"), 0);
+	if (fd < 0)
+		return error("cannot delete '%s' from packed refs", refname);
+
+	for (list = packed_ref_list; list; list = list->next) {
+		char line[PATH_MAX + 100];
+		int len;
+
+		if (!strcmp(refname, list->name))
+			continue;
+		len = snprintf(line, sizeof(line), "%s %s\n",
+			       sha1_to_hex(list->sha1), list->name);
+		/* this should not happen but just being defensive */
+		if (len > sizeof(line))
+			die("too long a refname '%s'", list->name);
+		write_or_die(fd, line, len);
+	}
+	return commit_lock_file(&packlock);
+}
+
+int delete_ref(const char *refname, unsigned char *sha1)
+{
+	struct ref_lock *lock;
+	int err, i, ret = 0, flag = 0;
+
+	lock = lock_ref_sha1_basic(refname, sha1, &flag);
+	if (!lock)
+		return 1;
+	if (!(flag & REF_ISPACKED)) {
+		/* loose */
+		i = strlen(lock->lk->filename) - 5; /* .lock */
+		lock->lk->filename[i] = 0;
+		err = unlink(lock->lk->filename);
+		if (err) {
+			ret = 1;
+			error("unlink(%s) failed: %s",
+			      lock->lk->filename, strerror(errno));
+		}
+		lock->lk->filename[i] = '.';
+	}
+	/* removing the loose one could have resurrected an earlier
+	 * packed one.  Also, if it was not loose we need to repack
+	 * without it.
+	 */
+	ret |= repack_without_ref(refname);
+
+	err = unlink(lock->log_file);
+	if (err && errno != ENOENT)
+		fprintf(stderr, "warning: unlink(%s) failed: %s",
+			lock->log_file, strerror(errno));
+	invalidate_cached_refs();
+	unlock_ref(lock);
+	return ret;
 }
 
 void unlock_ref(struct ref_lock *lock)
@@ -601,6 +773,7 @@ int write_ref_sha1(struct ref_lock *lock,
 		unlock_ref(lock);
 		return -1;
 	}
+	invalidate_cached_refs();
 	if (log_ref_write(lock, sha1, logmsg) < 0) {
 		unlock_ref(lock);
 		return -1;