diff --git a/ethcore/src/miner/miner.rs b/ethcore/src/miner/miner.rs
index 7348db566..a2dab4475 100644
--- a/ethcore/src/miner/miner.rs
+++ b/ethcore/src/miner/miner.rs
@@ -48,6 +48,17 @@ pub enum PendingSet {
 	SealingOrElseQueue,
 }
 
+/// Type of the gas limit to apply to the transaction queue.
+#[derive(Debug, PartialEq)]
+pub enum GasLimit {
+	/// Depends on the block gas limit and is updated with every block.
+	Auto,
+	/// No limit.
+	None,
+	/// Set to a fixed gas value.
+	Fixed(U256),
+}
+
 /// Configures the behaviour of the miner.
 #[derive(Debug, PartialEq)]
 pub struct MinerOptions {
@@ -71,6 +82,8 @@ pub struct MinerOptions {
 	pub work_queue_size: usize,
 	/// Can we submit two different solutions for the same block and expect both to result in an import?
 	pub enable_resubmission: bool,
+	/// Global gas limit for all transaction in the queue except for local and retracted.
+	pub tx_queue_gas_limit: GasLimit,
 }
 
 impl Default for MinerOptions {
@@ -86,6 +99,7 @@ impl Default for MinerOptions {
 			reseal_min_period: Duration::from_secs(2),
 			work_queue_size: 20,
 			enable_resubmission: true,
+			tx_queue_gas_limit: GasLimit::Auto,
 		}
 	}
 }
@@ -194,7 +208,11 @@ impl Miner {
 			true => None,
 			false => Some(WorkPoster::new(&options.new_work_notify))
 		};
-		let txq = Arc::new(Mutex::new(TransactionQueue::with_limits(options.tx_queue_size, !U256::zero(), options.tx_gas_limit)));
+		let gas_limit = match options.tx_queue_gas_limit {
+			GasLimit::Fixed(ref limit) => *limit,
+			_ => !U256::zero(),
+		};
+		let txq = Arc::new(Mutex::new(TransactionQueue::with_limits(options.tx_queue_size, gas_limit, options.tx_gas_limit)));
 		Miner {
 			transaction_queue: txq,
 			next_allowed_reseal: Mutex::new(Instant::now()),
@@ -443,8 +461,10 @@ impl Miner {
 		let gas_limit = HeaderView::new(&chain.best_block_header()).gas_limit();
 		let mut queue = self.transaction_queue.lock();
 		queue.set_gas_limit(gas_limit);
-		// Set total qx queue gas limit to be 2x the block gas limit.
-		queue.set_total_gas_limit(gas_limit << 1);
+		if let GasLimit::Auto = self.options.tx_queue_gas_limit {
+			// Set total tx queue gas limit to be 2x the block gas limit.
+			queue.set_total_gas_limit(gas_limit << 1);
+		}
 	}
 
 	/// Returns true if we had to prepare new pending block.
@@ -1062,6 +1082,7 @@ mod tests {
 				reseal_min_period: Duration::from_secs(5),
 				tx_gas_limit: !U256::zero(),
 				tx_queue_size: 1024,
+				tx_queue_gas_limit: GasLimit::None,
 				pending_set: PendingSet::AlwaysSealing,
 				work_queue_size: 5,
 				enable_resubmission: true,
diff --git a/ethcore/src/miner/mod.rs b/ethcore/src/miner/mod.rs
index c6bb00dce..8dfddf483 100644
--- a/ethcore/src/miner/mod.rs
+++ b/ethcore/src/miner/mod.rs
@@ -48,7 +48,7 @@ mod work_notify;
 mod price_info;
 
 pub use self::transaction_queue::{TransactionQueue, AccountDetails, TransactionOrigin};
-pub use self::miner::{Miner, MinerOptions, PendingSet, GasPricer, GasPriceCalibratorOptions};
+pub use self::miner::{Miner, MinerOptions, PendingSet, GasPricer, GasPriceCalibratorOptions, GasLimit};
 pub use self::external::{ExternalMiner, ExternalMinerService};
 pub use client::TransactionImportResult;
 
diff --git a/ethcore/src/miner/transaction_queue.rs b/ethcore/src/miner/transaction_queue.rs
index 38923438c..fdb652780 100644
--- a/ethcore/src/miner/transaction_queue.rs
+++ b/ethcore/src/miner/transaction_queue.rs
@@ -331,7 +331,9 @@ impl TransactionSet {
 					let r = gas.overflowing_add(order.gas);
 					if r.1 { return false }
 					gas = r.0;
-					count <= self.limit && gas <= self.gas_limit
+					// Own and retracted transactions are allowed to go above the gas limit, bot not above the count limit.
+					(gas <= self.gas_limit || order.origin == TransactionOrigin::Local || order.origin == TransactionOrigin::RetractedBlock) &&
+						count <= self.limit
 				})
 				.map(|order| by_hash.get(&order.hash)
 					.expect("All transactions in `self.by_priority` and `self.by_address` are kept in sync with `by_hash`."))
@@ -1762,13 +1764,27 @@ mod test {
 	#[test]
 	fn should_limit_by_gas() {
 		let mut txq = TransactionQueue::with_limits(100, default_gas_val() * U256::from(2), !U256::zero());
-		let (tx1, _) = new_tx_pair_default(U256::from(4), U256::from(1));
-		let (tx3, _) = new_tx_pair_default(U256::from(4), U256::from(2));
-		txq.add(tx1.clone(), &default_account_details, TransactionOrigin::External).unwrap();
-		txq.add(tx3.clone(), &default_account_details, TransactionOrigin::External).unwrap();
+		let (tx1, tx2) = new_tx_pair_default(U256::from(1), U256::from(1));
+		let (tx3, tx4) = new_tx_pair_default(U256::from(1), U256::from(2));
+		txq.add(tx1.clone(), &default_account_details, TransactionOrigin::External).ok();
+		txq.add(tx2.clone(), &default_account_details, TransactionOrigin::External).ok();
+		txq.add(tx3.clone(), &default_account_details, TransactionOrigin::External).ok();
+		txq.add(tx4.clone(), &default_account_details, TransactionOrigin::External).ok();
 		assert_eq!(txq.status().pending, 2);
 	}
 
+	#[test]
+	fn should_keep_own_transactions_above_gas_limit() {
+		let mut txq = TransactionQueue::with_limits(100, default_gas_val() * U256::from(2), !U256::zero());
+		let (tx1, tx2) = new_tx_pair_default(U256::from(1), U256::from(1));
+		let (tx3, tx4) = new_tx_pair_default(U256::from(1), U256::from(2));
+		txq.add(tx1.clone(), &default_account_details, TransactionOrigin::Local).unwrap();
+		txq.add(tx2.clone(), &default_account_details, TransactionOrigin::Local).unwrap();
+		txq.add(tx3.clone(), &default_account_details, TransactionOrigin::Local).unwrap();
+		txq.add(tx4.clone(), &default_account_details, TransactionOrigin::Local).unwrap();
+		assert_eq!(txq.status().pending, 4);
+	}
+
 	#[test]
 	fn should_drop_transactions_with_old_nonces() {
 		let mut txq = TransactionQueue::new();
diff --git a/parity/cli/config.full.toml b/parity/cli/config.full.toml
index 5b47e1184..2363f1740 100644
--- a/parity/cli/config.full.toml
+++ b/parity/cli/config.full.toml
@@ -68,6 +68,7 @@ price_update_period = "hourly"
 gas_floor_target = "4700000"
 gas_cap = "6283184"
 tx_queue_size = 2048
+tx_queue_gas = "auto"
 tx_gas_limit = "6283184"
 extra_data = "Parity"
 remove_solved = false
diff --git a/parity/cli/config.toml b/parity/cli/config.toml
index a5ad55d40..4ab691679 100644
--- a/parity/cli/config.toml
+++ b/parity/cli/config.toml
@@ -41,6 +41,7 @@ reseal_on_txs = "all"
 reseal_min_period = 4000
 price_update_period = "hourly"
 tx_queue_size = 2048
+tx_queue_gas = "auto"
 
 [footprint]
 tracing = "on"
diff --git a/parity/cli/mod.rs b/parity/cli/mod.rs
index 8044032eb..10348b21b 100644
--- a/parity/cli/mod.rs
+++ b/parity/cli/mod.rs
@@ -195,6 +195,8 @@ usage! {
 			or |c: &Config| otry!(c.mining).extra_data.clone().map(Some),
 		flag_tx_queue_size: usize = 2048usize,
 			or |c: &Config| otry!(c.mining).tx_queue_size.clone(),
+		flag_tx_queue_gas: String = "auto",
+			or |c: &Config| otry!(c.mining).tx_queue_gas.clone(),
 		flag_remove_solved: bool = false,
 			or |c: &Config| otry!(c.mining).remove_solved.clone(),
 		flag_notify_work: Option<String> = None,
@@ -348,6 +350,7 @@ struct Mining {
 	gas_cap: Option<String>,
 	extra_data: Option<String>,
 	tx_queue_size: Option<usize>,
+	tx_queue_gas: Option<String>,
 	remove_solved: Option<bool>,
 	notify_work: Option<Vec<String>>,
 }
@@ -523,6 +526,7 @@ mod tests {
 			flag_gas_cap: "6283184".into(),
 			flag_extra_data: Some("Parity".into()),
 			flag_tx_queue_size: 2048usize,
+			flag_tx_queue_gas: "auto".into(),
 			flag_remove_solved: false,
 			flag_notify_work: Some("http://localhost:3001".into()),
 
@@ -673,6 +677,7 @@ mod tests {
 				gas_floor_target: None,
 				gas_cap: None,
 				tx_queue_size: Some(2048),
+				tx_queue_gas: Some("auto".into()),
 				tx_gas_limit: None,
 				extra_data: None,
 				remove_solved: None,
diff --git a/parity/cli/usage.txt b/parity/cli/usage.txt
index 6ad0cec21..ca75c9ee0 100644
--- a/parity/cli/usage.txt
+++ b/parity/cli/usage.txt
@@ -184,6 +184,10 @@ Sealing/Mining Options:
                            more than 32 characters. (default: {flag_extra_data:?})
   --tx-queue-size LIMIT    Maximum amount of transactions in the queue (waiting
                            to be included in next block) (default: {flag_tx_queue_size}).
+  --tx-queue-gas LIMIT     Maximum amount of total gas for external transactions in
+                           the queue. LIMIT can be either an amount of gas or
+                           'auto' or 'off'. 'auto' sets the limit to be 2x
+                           the current block gas limit. (default: {flag_tx_queue_gas}).
   --remove-solved          Move solved blocks from the work package queue
                            instead of cloning them. This gives a slightly
                            faster import speed, but means that extra solutions
diff --git a/parity/configuration.rs b/parity/configuration.rs
index 4503b0f2f..54a72fab5 100644
--- a/parity/configuration.rs
+++ b/parity/configuration.rs
@@ -30,7 +30,7 @@ use rpc::{IpcConfiguration, HttpConfiguration};
 use ethcore_rpc::NetworkSettings;
 use cache::CacheConfig;
 use helpers::{to_duration, to_mode, to_block_id, to_u256, to_pending_set, to_price, replace_home,
-geth_ipc_path, parity_ipc_path, to_bootnodes, to_addresses, to_address};
+geth_ipc_path, parity_ipc_path, to_bootnodes, to_addresses, to_address, to_gas_limit};
 use params::{ResealPolicy, AccountsConfig, GasPricerConfig, MinerExtras, SpecType};
 use ethcore_logger::Config as LogConfig;
 use dir::Directories;
@@ -348,6 +348,7 @@ impl Configuration {
 				None => U256::max_value(),
 			},
 			tx_queue_size: self.args.flag_tx_queue_size,
+			tx_queue_gas_limit: try!(to_gas_limit(&self.args.flag_tx_queue_gas)),
 			pending_set: try!(to_pending_set(&self.args.flag_relay_set)),
 			reseal_min_period: Duration::from_millis(self.args.flag_reseal_min_period),
 			work_queue_size: self.args.flag_work_queue_size,
diff --git a/parity/helpers.rs b/parity/helpers.rs
index cdee9ede0..6f4f90953 100644
--- a/parity/helpers.rs
+++ b/parity/helpers.rs
@@ -22,7 +22,7 @@ use std::fs::File;
 use util::{clean_0x, U256, Uint, Address, path, CompactionProfile};
 use util::journaldb::Algorithm;
 use ethcore::client::{Mode, BlockID, VMType, DatabaseCompactionProfile, ClientConfig};
-use ethcore::miner::PendingSet;
+use ethcore::miner::{PendingSet, GasLimit};
 use cache::CacheConfig;
 use dir::DatabaseDirectories;
 use upgrade::upgrade;
@@ -93,6 +93,14 @@ pub fn to_pending_set(s: &str) -> Result<PendingSet, String> {
 	}
 }
 
+pub fn to_gas_limit(s: &str) -> Result<GasLimit, String> {
+	match s {
+		"auto" => Ok(GasLimit::Auto),
+		"off" => Ok(GasLimit::None),
+		other => Ok(GasLimit::Fixed(try!(to_u256(other)))),
+	}
+}
+
 pub fn to_address(s: Option<String>) -> Result<Address, String> {
 	match s {
 		Some(ref a) => clean_0x(a).parse().map_err(|_| format!("Invalid address: {:?}", a)),
diff --git a/rpc/src/v1/tests/eth.rs b/rpc/src/v1/tests/eth.rs
index 448fa4734..97e4d3bea 100644
--- a/rpc/src/v1/tests/eth.rs
+++ b/rpc/src/v1/tests/eth.rs
@@ -24,7 +24,7 @@ use ethcore::spec::{Genesis, Spec};
 use ethcore::block::Block;
 use ethcore::views::BlockView;
 use ethcore::ethereum;
-use ethcore::miner::{MinerOptions, GasPricer, MinerService, ExternalMiner, Miner, PendingSet};
+use ethcore::miner::{MinerOptions, GasPricer, MinerService, ExternalMiner, Miner, PendingSet, GasLimit};
 use ethcore::account_provider::AccountProvider;
 use devtools::RandomTempPath;
 use util::Hashable;
@@ -58,6 +58,7 @@ fn miner_service(spec: &Spec, accounts: Arc<AccountProvider>) -> Arc<Miner> {
 			reseal_on_own_tx: true,
 			tx_queue_size: 1024,
 			tx_gas_limit: !U256::zero(),
+			tx_queue_gas_limit: GasLimit::None,
 			pending_set: PendingSet::SealingOrElseQueue,
 			reseal_min_period: Duration::from_secs(0),
 			work_queue_size: 50,