diff --git a/CHANGELOG b/CHANGELOG
index 097d85c2..40f13a1a 100644
--- a/CHANGELOG
+++ b/CHANGELOG
@@ -564,6 +564,10 @@ HISTORY
 
   ++ Bug fixes:
 
+  2008-01-06 Jonathan Larmour
+  * dhcp.c: fix bug #19927: "DHCP NACK problem" by clearing any existing set IP
+  address entirely on receiving a DHCPNAK, and restarting discovery.
+
   2007-12-21 Simon Goldschmidt
   * sys.h, api_lib.c, api_msg.c, sockets.c: fix bug #21698: "netconn->recv_avail
     is not protected" by using new macros for interlocked access to modify/test
diff --git a/src/core/dhcp.c b/src/core/dhcp.c
index 5af53dbd..80d25b85 100644
--- a/src/core/dhcp.c
+++ b/src/core/dhcp.c
@@ -141,7 +141,8 @@ static void dhcp_option_trailer(struct dhcp *dhcp);
  * NAK means the client asked for something non-sensible, for
  * example when it tries to renew a lease obtained on another network.
  *
- * We back-off and will end up restarting a fresh DHCP negotiation later.
+ * We clear any existing set IP address and restart DHCP negotiation
+ * afresh (as per RFC2131 3.2.3).
  *
  * @param netif the netif under DHCP control
  */
@@ -149,12 +150,18 @@ static void
 dhcp_handle_nak(struct netif *netif)
 {
   struct dhcp *dhcp = netif->dhcp;
-  u16_t msecs = 10 * 1000;
   LWIP_DEBUGF(DHCP_DEBUG | LWIP_DBG_TRACE | 3, ("dhcp_handle_nak(netif=%p) %c%c%"U16_F"\n", 
     (void*)netif, netif->name[0], netif->name[1], (u16_t)netif->num));
-  dhcp->request_timeout = (msecs + DHCP_FINE_TIMER_MSECS - 1) / DHCP_FINE_TIMER_MSECS;
-  LWIP_DEBUGF(DHCP_DEBUG | LWIP_DBG_TRACE | LWIP_DBG_STATE, ("dhcp_handle_nak(): set request timeout %"U16_F" msecs\n", msecs));
+  /* Set the interface down since the address must no longer be used, as per RFC2131 */
+  netif_set_down(netif);
+  /* remove IP address from interface */
+  netif_set_ipaddr(netif, IP_ADDR_ANY);
+  netif_set_gw(netif, IP_ADDR_ANY);
+  netif_set_netmask(netif, IP_ADDR_ANY); 
+  /* Change to a defined state */
   dhcp_set_state(dhcp, DHCP_BACKING_OFF);
+  /* We can immediately restart discovery */
+  dhcp_discover();
 }
 
 /**