diff --git a/src/main/org/apache/tools/ant/ProjectHelper.java b/src/main/org/apache/tools/ant/ProjectHelper.java
index 9730af591..4b57755f8 100644
--- a/src/main/org/apache/tools/ant/ProjectHelper.java
+++ b/src/main/org/apache/tools/ant/ProjectHelper.java
@@ -233,7 +233,7 @@ public class ProjectHelper {
             if (project.getProperty("basedir") != null) {
                 project.setBasedir(project.getProperty("basedir"));
             } else {
-                project.setBasedir(baseDir);
+                project.setBasedir((new File(buildFile.getParent(), baseDir)).getAbsolutePath());
             }
 
         }
diff --git a/src/main/org/apache/tools/ant/taskdefs/Ant.java b/src/main/org/apache/tools/ant/taskdefs/Ant.java
index 7bb85b075..4ab44064e 100644
--- a/src/main/org/apache/tools/ant/taskdefs/Ant.java
+++ b/src/main/org/apache/tools/ant/taskdefs/Ant.java
@@ -79,7 +79,7 @@ import java.util.*;
  */
 public class Ant extends Task {
 
-    private String dir = null;
+    private File dir = null;
     private String antFile = null;
     private String target = null;
     private String output = null;
@@ -154,12 +154,13 @@ public class Ant extends Task {
                 reinit();
             }
         
-            if( dir==null) dir=".";
+            if(dir == null) 
+                dir = project.getBaseDir();
 
             initializeProject();
 
-            p1.setBasedir(dir);
-            p1.setUserProperty("basedir" , dir);
+            p1.setBaseDir(dir);
+            p1.setUserProperty("basedir" , dir.getAbsolutePath());
             
             // Override with local-defined properties
             Enumeration e = properties.elements();
@@ -168,7 +169,10 @@ public class Ant extends Task {
                 p.init();
             }
             
-            if (antFile == null) antFile = dir + "/build.xml";
+            if (antFile == null) 
+                antFile = "build.xml";
+
+            antFile = (new File(dir, antFile)).getAbsolutePath();
 
             p1.setUserProperty( "ant.file" , antFile );
             ProjectHelper.configureProject(p1, new File(antFile));
@@ -184,7 +188,7 @@ public class Ant extends Task {
         }
     }
 
-    public void setDir(String d) {
+    public void setDir(File d) {
         this.dir = d;
     }
 
diff --git a/src/main/org/apache/tools/ant/taskdefs/CallTarget.java b/src/main/org/apache/tools/ant/taskdefs/CallTarget.java
index 0460ec340..ccd3eb975 100644
--- a/src/main/org/apache/tools/ant/taskdefs/CallTarget.java
+++ b/src/main/org/apache/tools/ant/taskdefs/CallTarget.java
@@ -97,7 +97,7 @@ public class CallTarget extends Task {
                                      location);
         }
         
-        delegate.setDir(".");
+        delegate.setDir(project.getBaseDir());
         delegate.setAntfile(project.getProperty("ant.file"));
         delegate.setTarget(subTarget);
         delegate.execute();