diff --git a/HISTORY b/HISTORY
index 83b46a0..d31bc64 100644
--- a/HISTORY
+++ b/HISTORY
@@ -24,6 +24,9 @@ OpenPAM ??????????						2013-??-??
    subsequent text as well.  This went unnoticed because none of the
    unit tests for quoted strings had any text preceding the opening
    quote.
+
+ - BUGFIX: make --with-modules-dir work the way it was meant to work
+   (but never did).
 ============================================================================
 OpenPAM Micrampelis						2012-05-26
 
diff --git a/configure.ac b/configure.ac
index eea04f2..4ea8b77 100644
--- a/configure.ac
+++ b/configure.ac
@@ -48,14 +48,12 @@ AC_ARG_WITH([modules-dir],
 	[OpenPAM modules directory]),
     [AS_IF([test x"$withval" != x"no"], [
 	OPENPAM_MODULES_DIR="$withval"
-    ], [
-	OPENPAM_MODULES_DIR="$libdir"
-    ])],
-    [OPENPAM_MODULES_DIR="$libdir"])
-AC_DEFINE_UNQUOTED(OPENPAM_MODULES_DIR,
-    "${OPENPAM_MODULES_DIR%/}/",
-    [OpenPAM modules directory])
+	AC_DEFINE_UNQUOTED(OPENPAM_MODULES_DIR, 
+	    "${OPENPAM_MODULES_DIR%/}",
+	    [OpenPAM modules directory])
+    ])])
 AC_SUBST(OPENPAM_MODULES_DIR)
+AM_CONDITIONAL([CUSTOM_MODULES_DIR], [test x"$OPENPAM_MODULES_DIR" != x""])
 
 AC_ARG_WITH([doc],
     AC_HELP_STRING([--without-doc], [do not build documentation]),
diff --git a/lib/libpam/openpam_constants.c b/lib/libpam/openpam_constants.c
index ee86fc7..959e6f8 100644
--- a/lib/libpam/openpam_constants.c
+++ b/lib/libpam/openpam_constants.c
@@ -135,7 +135,11 @@ const char *openpam_policy_path[] = {
 };
 
 const char *openpam_module_path[] = {
+#ifdef OPENPAM_MODULES_DIRECTORY
+	OPENPAM_MODULES_DIRECTORY,
+#else
 	"/usr/lib",
 	"/usr/local/lib",
+#endif
 	NULL
 };
diff --git a/modules/pam_deny/Makefile.am b/modules/pam_deny/Makefile.am
index c18291e..67f919f 100644
--- a/modules/pam_deny/Makefile.am
+++ b/modules/pam_deny/Makefile.am
@@ -1,9 +1,13 @@
 # $Id$
 
-pkglibdir = @OPENPAM_MODULES_DIR@
+if CUSTOM_MODULES_DIR
+moduledir = @OPENPAM_MODULES_DIR@
+else
+moduledir = $(libdir)
+endif
 AM_CPPFLAGS = -I$(top_srcdir)/include
 
-pkglib_LTLIBRARIES = pam_deny.la
+module_LTLIBRARIES = pam_deny.la
 
 pam_deny_la_SOURCES = pam_deny.c
 pam_deny_la_LDFLAGS = -no-undefined -module -version-info @LIB_MAJ@ \
diff --git a/modules/pam_oath/Makefile.am b/modules/pam_oath/Makefile.am
index 154339b..1e65c55 100644
--- a/modules/pam_oath/Makefile.am
+++ b/modules/pam_oath/Makefile.am
@@ -1,9 +1,15 @@
 # $Id$
 
-pkglibdir = @OPENPAM_MODULES_DIR@
+if CUSTOM_MODULES_DIR
+moduledir = @OPENPAM_MODULES_DIR@
+else
+moduledir = $(libdir)
+endif
 AM_CPPFLAGS = -I$(top_srcdir)/include
 
-pkglib_LTLIBRARIES = pam_oath.la
+module_LTLIBRARIES = pam_oath.la
+
+pam_oath_la_SOURCES = pam_oath.c
 pam_oath_la_LDFLAGS = -no-undefined -module -version-info @LIB_MAJ@ \
 	-export-symbols-regex '^pam_sm_'
 pam_oath_la_LIBADD = \
diff --git a/modules/pam_permit/Makefile.am b/modules/pam_permit/Makefile.am
index b523d2c..9acf682 100644
--- a/modules/pam_permit/Makefile.am
+++ b/modules/pam_permit/Makefile.am
@@ -1,9 +1,13 @@
 # $Id$
 
-pkglibdir = @OPENPAM_MODULES_DIR@
+if CUSTOM_MODULES_DIR
+moduledir = @OPENPAM_MODULES_DIR@
+else
+moduledir = $(libdir)
+endif
 AM_CPPFLAGS = -I$(top_srcdir)/include
 
-pkglib_LTLIBRARIES = pam_permit.la
+module_LTLIBRARIES = pam_permit.la
 
 pam_permit_la_SOURCES = pam_permit.c
 pam_permit_la_LDFLAGS = -no-undefined -module -version-info @LIB_MAJ@ \
diff --git a/modules/pam_unix/Makefile.am b/modules/pam_unix/Makefile.am
index 8c98d7e..1c266ae 100644
--- a/modules/pam_unix/Makefile.am
+++ b/modules/pam_unix/Makefile.am
@@ -1,9 +1,13 @@
 # $Id$
 
-pkglibdir = @OPENPAM_MODULES_DIR@
+if CUSTOM_MODULES_DIR
+moduledir = @OPENPAM_MODULES_DIR@
+else
+moduledir = $(libdir)
+endif
 AM_CPPFLAGS = -I$(top_srcdir)/include
 
-pkglib_LTLIBRARIES = pam_unix.la
+module_LTLIBRARIES = pam_unix.la
 
 pam_unix_la_SOURCES = pam_unix.c
 pam_unix_la_LDFLAGS = -no-undefined -module -version-info @LIB_MAJ@ \