diff --git a/src/LyXAction.C b/src/LyXAction.C
index b420559653..b03658c038 100644
--- a/src/LyXAction.C
+++ b/src/LyXAction.C
@@ -328,6 +328,7 @@ void LyXAction::init()
 		{ LFUN_DIALOG_HIDE, "dialog-hide", Noop },
 		{ LFUN_DIALOG_DISCONNECT_INSET, "dialog-disconnect-inset", Noop },
 		{ LFUN_INSET_APPLY, "inset-apply", Noop },
+		{ LFUN_INSET_DISSOLVE, "inset-dissolve", Noop },
 		{ LFUN_INSET_INSERT, "inset-insert", Noop },
 		{ LFUN_INSET_MODIFY, "", Noop },
 		{ LFUN_INSET_DIALOG_UPDATE, "", Noop },
diff --git a/src/insets/insettext.C b/src/insets/insettext.C
index 8bcc58ef48..f6e5a6ae8d 100644
--- a/src/insets/insettext.C
+++ b/src/insets/insettext.C
@@ -22,6 +22,7 @@
 #include "dispatchresult.h"
 #include "errorlist.h"
 #include "funcrequest.h"
+#include "FuncStatus.h"
 #include "gettext.h"
 #include "intl.h"
 #include "LColor.h"
@@ -263,16 +264,50 @@ void InsetText::forceParagraphsToDefault(LCursor & cur)
 void InsetText::doDispatch(LCursor & cur, FuncRequest & cmd)
 {
 	lyxerr[Debug::DEBUG] << BOOST_CURRENT_FUNCTION
-    << " [ cmd.action = " << cmd.action << ']' << endl;
+			     << " [ cmd.action = "
+			     << cmd.action << ']' << endl;
 	setViewCache(&cur.bv());
-	text_.dispatch(cur, cmd);
+
+	switch (cmd.action) {
+
+	case LFUN_CHAR_DELETE_FORWARD: {
+		if (!cur.selection() && cur.depth() > 1
+		    && cur.pit() == cur.lastpit()
+		    && cur.pos() == cur.lastpos())
+			// Merge inset with owner
+			cmd = FuncRequest(LFUN_INSET_DISSOLVE);
+		text_.dispatch(cur, cmd);
+		break;
+	}
+
+	case LFUN_CHAR_DELETE_BACKWARD: {
+		if (cur.depth() > 1 && cur.pit() == 0 && cur.pos() == 0)
+			// Merge inset with owner
+			cmd = FuncRequest(LFUN_INSET_DISSOLVE);
+		text_.dispatch(cur, cmd);
+		break;
+	}
+	
+	default:
+		text_.dispatch(cur, cmd);
+		break;
+	}
 }
 
 
 bool InsetText::getStatus(LCursor & cur, FuncRequest const & cmd,
 	FuncStatus & status) const
 {
-	return text_.getStatus(cur, cmd, status);
+	switch (cmd.action) {
+
+	case LFUN_CHAR_DELETE_FORWARD:
+	case LFUN_CHAR_DELETE_BACKWARD:
+		status.enabled(true);
+		return true;
+
+	default:
+		return text_.getStatus(cur, cmd, status);
+	}
 }
 
 
diff --git a/src/lfuns.h b/src/lfuns.h
index c286ed6e96..8c0b79608b 100644
--- a/src/lfuns.h
+++ b/src/lfuns.h
@@ -367,6 +367,7 @@ enum kb_action {
 	// 280
 	LFUN_MATH_BIGDELIM,
 	LFUN_CLIPBOARD_PASTE,
+	LFUN_INSET_DISSOLVE,                 // jspitzm 20060807
 
 	LFUN_LASTACTION                  // end of the table
 };
diff --git a/src/text3.C b/src/text3.C
index f2c952590b..7b26d02eb8 100644
--- a/src/text3.C
+++ b/src/text3.C
@@ -705,6 +705,44 @@ void LyXText::dispatch(LCursor & cur, FuncRequest & cmd)
 		break;
 	}
 
+	case LFUN_INSET_DISSOLVE: {
+		recordUndo(cur);
+		cur.selHandle(false);
+		// save position
+		lyx::pos_type spos = cur.pos();
+		lyx::pit_type spit = cur.pit();
+		bool content = false;
+		if (cur.lastpit() != 0 || cur.lastpos() != 0) {
+			setCursor(cur, 0, 0);
+			cur.resetAnchor();
+			cur.pit() = cur.lastpit();
+			cur.pos() = cur.lastpos();
+			cur.setSelection();
+			copySelection(cur);
+			content = true;
+		}
+			cur.popLeft();
+			cur.resetAnchor();
+			// store cursor offset
+			if (spit == 0)
+				spos += cur.pos();
+			spit += cur.pit();
+			cur.pos()++;
+			cur.setSelection();
+		if (content) {
+			lyx::cap::replaceSelection(cur);
+			pasteSelection(cur, 0);
+			cur.clearSelection();
+			// restore position
+			cur.pit() = std::min(cur.lastpit(), spit);
+			cur.pos() = std::min(cur.lastpos(), spos);
+			cur.resetAnchor();
+		} else
+			cutSelection(cur, false, false);
+		needsUpdate = true;
+		break;
+	}
+
 	case LFUN_INSET_SETTINGS:
 		cur.inset().showInsetDialog(bv);
 		break;
@@ -1711,6 +1749,11 @@ bool LyXText::getStatus(LCursor & cur, FuncRequest const & cmd,
 		break;
 	}
 
+	case LFUN_INSET_DISSOLVE: {
+		enable = &cur.inset() && cur.inTexted();
+		break;
+	}
+
 	case LFUN_WORD_DELETE_FORWARD:
 	case LFUN_WORD_DELETE_BACKWARD:
 	case LFUN_LINE_DELETE: