diff --git a/STABLE2/changelog.txt b/STABLE2/changelog.txt
index e16074461..02bee8add 100644
--- a/STABLE2/changelog.txt
+++ b/STABLE2/changelog.txt
@@ -89,3 +89,5 @@ Changes in 2.0.12
 1) Correct typo in shorewall.conf.
 
 2) Fix "shorewall add" and "shorewall delete" with bridging.
+
+3) Implement variable expansion in INCLUDE directives
diff --git a/STABLE2/functions b/STABLE2/functions
index e3bbb5023..5b4ff3322 100755
--- a/STABLE2/functions
+++ b/STABLE2/functions
@@ -52,9 +52,9 @@ qt()
 #
 # Perform variable substitution on the passed argument and echo the result
 #
-expand() # $1 = contents of variable which may be the name of another variable
+expand() # $@ = contents of variable which may be the name of another variable
 {
-    eval echo \"$1\"
+    eval echo \"$@\"
 }
 
 #
@@ -104,7 +104,8 @@ ensure_config_path() {
 #
 # Find a File -- For relative file name, look first in $SHOREWALL_DIR then in /etc/shorewall
 #
-find_file()
+find_file
+()
 {
     local saveifs= directory
 
@@ -434,7 +435,7 @@ read_file() # $1 = file name, $2 = nest count
 	while read first rest; do
 	    if [ "x$first"  = "xINCLUDE" ]; then
 		if [ $2 -lt 4 ]; then
-		    read_file $(find_file ${rest%#*}) $(($2 + 1))
+		    read_file $(find_file $(expand ${rest%#*})) $(($2 + 1))
 		else
 		    echo "   WARNING: INCLUDE in $1 ignored (nested too deeply)" >&2
 		fi
@@ -452,7 +453,7 @@ read_file() # $1 = file name, $2 = nest count
 # Function for including one file into another
 #
 INCLUDE() {
-    . $(find_file $@)
+    . $(find_file $(expand $@))
 }
 
 #
diff --git a/STABLE2/releasenotes.txt b/STABLE2/releasenotes.txt
index 513430141..c8bc61107 100644
--- a/STABLE2/releasenotes.txt
+++ b/STABLE2/releasenotes.txt
@@ -204,3 +204,17 @@ Problems corrected in 2.0.12
 
 	   shorewall add br0:eth2:192.168.1.3 OK
 	   shorewall delete br0:eth2:192.168.1.3 OK
+-----------------------------------------------------------------------
+New Features in 2.0.12
+
+1)  Variable expansion may now be used with the INCLUDE directive.
+
+    Example:
+
+	/etc/shorewall/params
+
+	    FILE=/etc/foo/bar
+
+        Any other config file:
+
+	    INCLUDE $FILE
diff --git a/Shorewall2/changelog.txt b/Shorewall2/changelog.txt
index 7559fa0c5..e60d1df09 100644
--- a/Shorewall2/changelog.txt
+++ b/Shorewall2/changelog.txt
@@ -158,3 +158,6 @@ Changes since 2.0.3
 76) Add "shorewall show zones"
 
 77) Remove dependency of "show zones" on dynamic zones.
+
+78) Implement variable expansion in INCLUDE directives
+
diff --git a/Shorewall2/functions b/Shorewall2/functions
index 628fbdd7b..80c5ef2d5 100755
--- a/Shorewall2/functions
+++ b/Shorewall2/functions
@@ -73,9 +73,9 @@ qt()
 #
 # Perform variable substitution on the passed argument and echo the result
 #
-expand() # $1 = contents of variable which may be the name of another variable
+expand() # $@ = contents of variable which may be the name of another variable
 {
-    eval echo \"$1\"
+    eval echo \"$@\"
 }
 
 #
@@ -459,7 +459,7 @@ read_file() # $1 = file name, $2 = nest count
 	while read first rest; do
 	    if [ "x$first"  = "xINCLUDE" ]; then
 		if [ $2 -lt 4 ]; then
-		    read_file $(find_file ${rest%#*}) $(($2 + 1))
+		    read_file $(find_file $(expand ${rest%#*})) $(($2 + 1))
 		else
 		    echo "   WARNING: INCLUDE in $1 ignored (nested too deeply)" >&2
 		fi
@@ -477,7 +477,7 @@ read_file() # $1 = file name, $2 = nest count
 # Function for including one file into another
 #
 INCLUDE() {
-    . $(find_file $@)
+    . $(find_file $(expand $@))
 }
 
 #
diff --git a/Shorewall2/releasenotes.txt b/Shorewall2/releasenotes.txt
index 2edb27001..53ec86e9b 100755
--- a/Shorewall2/releasenotes.txt
+++ b/Shorewall2/releasenotes.txt
@@ -734,4 +734,14 @@ New Features:
  
 	ursa:/etc/shorewall #
 
+32) Variable expansion may now be used with the INCLUDE directive.
 
+    Example:
+
+	/etc/shorewall/params
+
+	    FILE=/etc/foo/bar
+
+        Any other config file:
+
+	    INCLUDE $FILE