diff --git a/src/AddIns/BackendBindings/WixBinding/Project/Src/Commands/AddFilesToDirectoryCommand.cs b/src/AddIns/BackendBindings/WixBinding/Project/Src/Commands/AddFilesToDirectoryCommand.cs
new file mode 100644
index 0000000000..885f912276
--- /dev/null
+++ b/src/AddIns/BackendBindings/WixBinding/Project/Src/Commands/AddFilesToDirectoryCommand.cs
@@ -0,0 +1,21 @@
+// <file>
+//     <copyright see="prj:///doc/copyright.txt"/>
+//     <license see="prj:///doc/license.txt"/>
+//     <owner name="Matthew Ward" email="mrward@users.sourceforge.net"/>
+//     <version>$Revision$</version>
+// </file>
+
+using System;
+using ICSharpCode.Core;
+
+namespace ICSharpCode.WixBinding
+{
+	public class AddFilesToDirectoryCommand : AbstractMenuCommand
+	{
+		public override void Run()
+		{
+			PackageFilesView.ActiveView.AddFiles();
+		}
+	}
+}
+
diff --git a/src/AddIns/BackendBindings/WixBinding/Project/Src/Gui/PackageFilesView.cs b/src/AddIns/BackendBindings/WixBinding/Project/Src/Gui/PackageFilesView.cs
index 5faaa72deb..0aa75495fc 100644
--- a/src/AddIns/BackendBindings/WixBinding/Project/Src/Gui/PackageFilesView.cs
+++ b/src/AddIns/BackendBindings/WixBinding/Project/Src/Gui/PackageFilesView.cs
@@ -136,7 +136,7 @@ namespace ICSharpCode.WixBinding
 		}
 		
 		/// <summary>
-		/// Adds files to the selected Component element tree node.
+		/// Adds files to the selected Component element or Directory element tree node.
 		/// </summary>
 		public void AddFiles()
 		{
diff --git a/src/AddIns/BackendBindings/WixBinding/Project/Src/WixPackageFilesEditor.cs b/src/AddIns/BackendBindings/WixBinding/Project/Src/WixPackageFilesEditor.cs
index 43195d02b2..7432197007 100644
--- a/src/AddIns/BackendBindings/WixBinding/Project/Src/WixPackageFilesEditor.cs
+++ b/src/AddIns/BackendBindings/WixBinding/Project/Src/WixPackageFilesEditor.cs
@@ -251,10 +251,15 @@ namespace ICSharpCode.WixBinding
 		void AddFile(string fileName)
 		{
 			WixComponentElement componentElement = view.SelectedElement as WixComponentElement;
+			WixDirectoryElement directoryElement = view.SelectedElement as WixDirectoryElement;
 			if (componentElement != null) {
 				WixFileElement fileElement = AddFile(componentElement, fileName);
 				view.AddElement(fileElement);
 				view.IsDirty = true;
+			} else if (directoryElement != null) {
+				componentElement = AddFileWithParentComponent(directoryElement, fileName);
+				view.AddElement(componentElement);
+				view.IsDirty = true;
 			}
 		}
 		
@@ -415,17 +420,25 @@ namespace ICSharpCode.WixBinding
 			foreach (string fileName in DirectoryReader.GetFiles(directory)) {
 				if (!excludedNames.IsExcluded(fileName)) {
 					string path = Path.Combine(directory, fileName);
-					string id = WixComponentElement.GenerateIdFromFileName(document, path);
-					WixComponentElement component = AddComponent(directoryElement, id);
-					AddFile(component, path);
+					AddFileWithParentComponent(directoryElement, path);
 				}
 			}
 		}
+
+		/// <summary>
+		/// Adds a new Wix Component to the directory element. The file will then be added to this
+		/// component.
+		/// </summary>
+		WixComponentElement AddFileWithParentComponent(WixDirectoryElement directoryElement, string fileName)
+		{
+			string id = WixComponentElement.GenerateIdFromFileName(document, fileName);
+			WixComponentElement component = AddComponent(directoryElement, id);			
+			AddFile(component, fileName);
+			return component;
+		}
 		
 		IDirectoryReader DirectoryReader {
-			get {
-				return directoryReader;
-			}
+			get { return directoryReader; }
 		}
 		
 		/// <summary>
diff --git a/src/AddIns/BackendBindings/WixBinding/Project/WixBinding.addin b/src/AddIns/BackendBindings/WixBinding/Project/WixBinding.addin
index c352b1da1c..b048039a79 100644
--- a/src/AddIns/BackendBindings/WixBinding/Project/WixBinding.addin
+++ b/src/AddIns/BackendBindings/WixBinding/Project/WixBinding.addin
@@ -213,6 +213,9 @@
 		<MenuItem id = "AddDirectory"
 			label = "${res:ICSharpCode.WixBinding.PackagesFilesView.ContextMenu.AddDirectory}"
 			class = "ICSharpCode.WixBinding.AddDirectoryCommand"/>
+		<MenuItem id = "AddFilesToDirectory"
+			label = "${res:ICSharpCode.WixBinding.PackagesFilesView.ContextMenu.AddFiles}"
+			class = "ICSharpCode.WixBinding.AddFilesToDirectoryCommand"/>
 		<MenuItem id = "Diff"
 				label = "Diff"
 				class = "ICSharpCode.WixBinding.ShowDiffCommand"/>
diff --git a/src/AddIns/BackendBindings/WixBinding/Project/WixBinding.csproj b/src/AddIns/BackendBindings/WixBinding/Project/WixBinding.csproj
index 627b084c39..eb74fd0fe1 100644
--- a/src/AddIns/BackendBindings/WixBinding/Project/WixBinding.csproj
+++ b/src/AddIns/BackendBindings/WixBinding/Project/WixBinding.csproj
@@ -45,6 +45,7 @@
     <Reference Include="Microsoft.Build.Engine" />
   </ItemGroup>
   <ItemGroup>
+    <Compile Include="Src\Commands\AddFilesToDirectoryCommand.cs" />
     <Compile Include="Src\Commands\AddWixExtensionToProject.cs" />
     <Compile Include="Src\Commands\AddWixItemToProjectBaseCommand.cs" />
     <Compile Include="Src\Project\WixExtensionFolderNode.cs" />
diff --git a/src/AddIns/BackendBindings/WixBinding/Test/PackageFiles/AddFilesToDirectoryTestFixture.cs b/src/AddIns/BackendBindings/WixBinding/Test/PackageFiles/AddFilesToDirectoryTestFixture.cs
new file mode 100644
index 0000000000..65d9e16cd0
--- /dev/null
+++ b/src/AddIns/BackendBindings/WixBinding/Test/PackageFiles/AddFilesToDirectoryTestFixture.cs
@@ -0,0 +1,154 @@
+// <file>
+//     <copyright see="prj:///doc/copyright.txt"/>
+//     <license see="prj:///doc/license.txt"/>
+//     <owner name="Matthew Ward" email="mrward@users.sourceforge.net"/>
+//     <version>$Revision$</version>
+// </file>
+
+using ICSharpCode.SharpDevelop.Project;
+using ICSharpCode.WixBinding;
+using NUnit.Framework;
+using System;
+using System.Collections.Specialized;
+using System.IO;
+using System.Xml;
+using WixBinding.Tests.Utils;
+
+namespace WixBinding.Tests.PackageFiles
+{
+	/// <summary>
+	/// Tests that files can be added when a directory element is selected in the PackageFilesEditor.
+	/// </summary>
+	[TestFixture]
+	public class AddFilesToDirectoryTestFixture : PackageFilesTestFixtureBase
+	{
+		XmlElement exeFileElement;
+		XmlElement installDirElement;
+		XmlElement readmeFileElement;
+		XmlElement exeFileComponentElement;
+		XmlElement readmeFileComponentElement;
+		string[] fileNames;
+		string exeFileName;
+		string readmeFileName;
+		
+		[SetUp]
+		public void Init()
+		{
+			base.InitFixture();
+			installDirElement = (XmlElement)editor.Document.RootDirectory.ChildNodes[0].ChildNodes[0];
+			view.SelectedElement = installDirElement;
+			editor.SelectedElementChanged();
+			exeFileName = Path.Combine(project.Directory, @"bin\TestApplication.exe");
+			readmeFileName = Path.Combine(project.Directory, @"docs\readme.rtf");
+			fileNames = new string[] {exeFileName, readmeFileName};
+			editor.AddFiles(fileNames);
+			if (installDirElement.ChildNodes.Count > 1) {
+				exeFileComponentElement = (XmlElement)installDirElement.ChildNodes[0];
+				if (exeFileComponentElement.HasChildNodes) {
+					exeFileElement = (XmlElement)exeFileComponentElement.ChildNodes[0];
+				}
+				readmeFileComponentElement = (XmlElement)installDirElement.ChildNodes[1];
+				if (readmeFileComponentElement.HasChildNodes) {
+					readmeFileElement = (XmlElement)readmeFileComponentElement.ChildNodes[0];
+				}
+			}
+		}
+		
+		[Test]
+		public void IsDirty()
+		{
+			Assert.IsTrue(view.IsDirty);
+		}
+		
+		/// <summary>
+		/// The two parent component elements are added to the view. The child elements
+		/// are not added directly to the view since they are child nodes of the component elements.
+		/// </summary>
+		[Test]
+		public void TwoElementsAddedToView()
+		{
+			Assert.AreEqual(2, view.ElementsAdded.Length);
+		}
+		
+		[Test]
+		public void SanityCheckInstallDirectoryElement()
+		{
+			Assert.AreEqual("INSTALLDIR", installDirElement.GetAttribute("Id"));
+		}
+		
+		[Test]
+		public void InstallDirectoryElementHasTwoChildNodes()
+		{
+			Assert.AreEqual(2, installDirElement.ChildNodes.Count);
+		}
+		
+		[Test]
+		public void ExeFileComponentElementExists()
+		{
+			Assert.IsNotNull(exeFileComponentElement);
+		}
+		
+		[Test]
+		public void ReadmeFileComponentElementExists()
+		{
+			Assert.IsNotNull(readmeFileComponentElement);
+		}
+
+		[Test]
+		public void ExeFileComponentId()
+		{
+			string expectedId = WixComponentElement.GenerateIdFromFileName("TestApplication.exe");
+			Assert.AreEqual(expectedId, exeFileComponentElement.GetAttribute("Id"));
+		}
+
+		[Test]
+		public void ReadmeFileComponentId()
+		{
+			string expectedId = WixComponentElement.GenerateIdFromFileName("readme.rtf");
+			Assert.AreEqual(expectedId, readmeFileComponentElement.GetAttribute("Id"));
+		}
+
+		[Test]
+		public void ExeFileId()
+		{
+			Assert.AreEqual("TestApplication.exe", exeFileElement.GetAttribute("Id"));
+		}
+		
+		[Test]
+		public void ReadmeFileId()
+		{
+			Assert.AreEqual("readme.rtf", readmeFileElement.GetAttribute("Id"));
+		}
+		
+		[Test]
+		public void ExeFileElementExists()
+		{
+			Assert.IsNotNull(exeFileElement);
+		}
+		
+		[Test]
+		public void ReadmeFileElementExists()
+		{
+			Assert.IsNotNull(readmeFileElement);
+		}
+		
+		protected override string GetWixXml()
+		{
+			return "<Wix xmlns=\"http://schemas.microsoft.com/wix/2006/wi\">\r\n" +
+				"\t<Product Name=\"MySetup\" \r\n" +
+				"\t         Manufacturer=\"\" \r\n" +
+				"\t         Id=\"F4A71A3A-C271-4BE8-B72C-F47CC956B3AA\" \r\n" +
+				"\t         Language=\"1033\" \r\n" +
+				"\t         Version=\"1.0.0.0\">\r\n" +
+				"\t\t<Package Id=\"6B8BE64F-3768-49CA-8BC2-86A76424DFE9\"/>\r\n" +
+				"\t\t<Directory Id=\"TARGETDIR\" SourceName=\"SourceDir\">\r\n" +
+				"\t\t\t<Directory Id=\"ProgramFilesFolder\" Name=\"PFiles\">\r\n" +
+				"\t\t\t\t<Directory Id=\"INSTALLDIR\" Name=\"MyApp\">\r\n" +
+				"\t\t\t\t</Directory>\r\n" +
+				"\t\t\t</Directory>\r\n" +
+				"\t\t</Directory>\r\n" +
+				"\t</Product>\r\n" +
+				"</Wix>";
+		}		
+	}
+}
diff --git a/src/AddIns/BackendBindings/WixBinding/Test/WixBinding.Tests.csproj b/src/AddIns/BackendBindings/WixBinding/Test/WixBinding.Tests.csproj
index 31b1af3f07..532c50ea81 100644
--- a/src/AddIns/BackendBindings/WixBinding/Test/WixBinding.Tests.csproj
+++ b/src/AddIns/BackendBindings/WixBinding/Test/WixBinding.Tests.csproj
@@ -54,6 +54,7 @@
     <Compile Include="Gui\DeleteWixExtensionNodeTestFixture.cs" />
     <Compile Include="Gui\WixFileTreeNodeTestFixture.cs" />
     <Compile Include="Gui\WixProjectWithWixExtensionItemsTestFixture.cs" />
+    <Compile Include="PackageFiles\AddFilesToDirectoryTestFixture.cs" />
     <Compile Include="Project\AddWixExtensionTestFixture.cs" />
     <Compile Include="Project\AddWixLibraryTestFixture.cs" />
     <Compile Include="Gui\AddWixProjectNodeTestFixture.cs" />