diff --git a/model/DataObject.php b/model/DataObject.php
index ea9ad1d2d..fc5fb6bbe 100644
--- a/model/DataObject.php
+++ b/model/DataObject.php
@@ -784,10 +784,15 @@ class DataObject extends ViewableData implements DataObjectInterface, i18nEntity
 					// no support for has_many or many_many relationships,
 					// as the updater wouldn't know which object to write to (or create)
 					if($relObj->$relation() instanceof DataObject) {
+						$parentObj = $relObj;
 						$relObj = $relObj->$relation();
-						
 						// If the intermediate relationship objects have been created, then write them
-						if($i<sizeof($relation)-1 && !$relObj->ID) $relObj->write();
+						if($i<sizeof($relation)-1 && !$relObj->ID || (!$relObj->ID && $parentObj != $this)) {
+							$relObj->write();
+							$relatedFieldName = $relation."ID";
+							$parentObj->$relatedFieldName = $relObj->ID;
+							$parentObj->write();
+						}
 					} else {
 						user_error(
 							"DataObject::update(): Can't traverse relationship '$relation'," .  
@@ -803,6 +808,8 @@ class DataObject extends ViewableData implements DataObjectInterface, i18nEntity
 				if($relObj) {
 					$relObj->$fieldName = $v;
 					$relObj->write();
+					$relatedFieldName = $relation."ID";
+					$this->$relatedFieldName = $relObj->ID;
 					$relObj->flushCache();
 				} else {
 					user_error("Couldn't follow dot syntax '$k' on '$this->class' object", E_USER_WARNING);
diff --git a/tests/model/DataObjectTest.php b/tests/model/DataObjectTest.php
index aa8a45782..261aa696c 100644
--- a/tests/model/DataObjectTest.php
+++ b/tests/model/DataObjectTest.php
@@ -619,14 +619,14 @@ class DataObjectTest extends SapphireTest {
 		 * objects */
 		$team1 = $this->objFromFixture('DataObjectTest_Team', 'team1');
 		$team1->CaptainID = $this->idFromFixture('DataObjectTest_Player', 'captain1');
-		
+
 		$team1->update(array(
 			'DatabaseField' => 'Something',
 			'Captain.FirstName' => 'Jim',
 			'Captain.Email' => 'jim@example.com',
 			'Captain.FavouriteTeam.Title' => 'New and improved team 1',
 		));
-		
+
 		/* Test the simple case of updating fields on the object itself */
 		$this->assertEquals('Something', $team1->DatabaseField);
 
@@ -642,6 +642,29 @@ class DataObjectTest extends SapphireTest {
 		$this->assertEquals('New and improved team 1', $reloadedTeam1->Title);
 	}
 
+	public function testDataObjectUpdateNew() {
+		/* update() calls can use the dot syntax to reference has_one relations and other methods that return
+		 * objects */
+		$team1 = $this->objFromFixture('DataObjectTest_Team', 'team1');
+		$team1->CaptainID = 0;
+
+		$team1->update(array(
+			'Captain.FirstName' => 'Jim',
+			'Captain.FavouriteTeam.Title' => 'New and improved team 1',
+		));
+		/* Test that the captain ID has been updated */
+		$this->assertGreaterThan(0, $team1->CaptainID);
+
+		/* Fetch the newly created captain */
+		$captain1 = DataObjectTest_Player::get()->byID($team1->CaptainID);
+		$this->assertEquals('Jim', $captain1->FirstName);
+
+		/* Grab the favourite team and make sure it has the correct values */
+		$reloadedTeam1 = $captain1->FavouriteTeam();
+		$this->assertEquals($reloadedTeam1->ID, $captain1->FavouriteTeamID);
+		$this->assertEquals('New and improved team 1', $reloadedTeam1->Title);
+	}
+
 	public function testWritingInvalidDataObjectThrowsException() {
 		$validatedObject = new DataObjectTest_ValidatedObject();