diff --git a/package.xml b/package.xml
index 2091f2e2..27491332 100644
--- a/package.xml
+++ b/package.xml
@@ -94,6 +94,7 @@ Tests
     <file role='test' name='check_if_persistent.phpt'/>
     <file role='test' name='check_if_pristine.phpt'/>
     <file role='test' name='clone.phpt'/>
+    <file role='test' name='compression_conditions.phpt'/>
     <file role='test' name='compression_types.phpt'/>
     <file role='test' name='conf_persist.phpt'/>
     <file role='test' name='construct.phpt'/>
diff --git a/php_memcached.c b/php_memcached.c
index b014ecc6..1e73a4f9 100644
--- a/php_memcached.c
+++ b/php_memcached.c
@@ -830,6 +830,7 @@ zend_bool s_compress_value (php_memc_compression_type compression_type, zend_str
 	/* status */
 	zend_bool compress_status = 0;
 	zend_string *payload = *payload_in;
+	uint32_t compression_type_flag = 0;
 
 	/* Additional 5% for the data */
 	size_t buffer_size = (size_t) (((double) ZSTR_LEN(payload) * 1.05) + 1.0);
@@ -847,7 +848,7 @@ zend_bool s_compress_value (php_memc_compression_type compression_type, zend_str
 
 			if (compressed_size > 0) {
 				compress_status = 1;
-				MEMC_VAL_SET_FLAG(*flags, MEMC_VAL_COMPRESSION_FASTLZ);
+				compression_type_flag = MEMC_VAL_COMPRESSION_FASTLZ;
 			}
 		}
 			break;
@@ -859,7 +860,7 @@ zend_bool s_compress_value (php_memc_compression_type compression_type, zend_str
 
 			if (status == Z_OK) {
 				compress_status = 1;
-				MEMC_VAL_SET_FLAG(*flags, MEMC_VAL_COMPRESSION_ZLIB);
+				compression_type_flag = MEMC_VAL_COMPRESSION_ZLIB;
 			}
 		}
 			break;
@@ -869,31 +870,29 @@ zend_bool s_compress_value (php_memc_compression_type compression_type, zend_str
 			break;
 	}
 
-	if (!compress_status) {
-		php_error_docref(NULL, E_WARNING, "could not compress value");
-		efree (buffer);
-		return 0;
-	}
-
-	/* This means the value was too small to be compressed, still a success */
+	/* This means the value was too small to be compressed and ended up larger */
 	if (ZSTR_LEN(payload) <= (compressed_size * MEMC_G(compression_factor))) {
-		MEMC_VAL_DEL_FLAG(*flags, MEMC_VAL_COMPRESSION_FASTLZ | MEMC_VAL_COMPRESSION_ZLIB);
-		efree (buffer);
-		return 1;
+		compress_status = 0;
 	}
 
-	MEMC_VAL_SET_FLAG(*flags, MEMC_VAL_COMPRESSED);
+	/* Replace the payload with the compressed copy */
+	if (compress_status) {
+		MEMC_VAL_SET_FLAG(*flags, MEMC_VAL_COMPRESSED | compression_type_flag);
+		payload = zend_string_realloc(payload, compressed_size + sizeof(uint32_t), 0);
 
-	payload = zend_string_realloc(payload, compressed_size + sizeof(uint32_t), 0);
+		/* Copy the uin32_t at the beginning */
+		memcpy(ZSTR_VAL(payload), &original_size, sizeof(uint32_t));
+		memcpy(ZSTR_VAL(payload) + sizeof (uint32_t), buffer, compressed_size);
+		efree(buffer);
 
-	/* Copy the uin32_t at the beginning */
-	memcpy(ZSTR_VAL(payload), &original_size, sizeof(uint32_t));
-	memcpy(ZSTR_VAL(payload) + sizeof (uint32_t), buffer, compressed_size);
-	efree(buffer);
+		zend_string_forget_hash_val(payload);
+		*payload_in = payload;
 
-	zend_string_forget_hash_val(payload);
-	*payload_in = payload;
-	return 1;
+		return 1;
+	}
+
+	/* Original payload was not modified */
+	return 0;
 }
 
 static
@@ -1043,11 +1042,13 @@ zend_string *s_zval_to_payload(php_memc_object_t *intern, zval *value, uint32_t
 
 	/* If we have compression flag, compress the value */
 	if (should_compress) {
-		/* status */
-		if (!s_compress_value (memc_user_data->compression_type, &payload, flags)) {
-			zend_string_release(payload);
-			return NULL;
-		}
+		/* s_compress_value() will always leave a valid payload, even if that payload
+		 * did not actually get compressed. The flags will be set according to the
+		 * to the compression type or no compression.
+		 *
+		 * No need to check the return value because the payload is always valid.
+		 */
+		(void)s_compress_value (memc_user_data->compression_type, &payload, flags);
 	}
 
 	if (memc_user_data->set_udf_flags >= 0) {
diff --git a/tests/compression_conditions.phpt b/tests/compression_conditions.phpt
new file mode 100644
index 00000000..749ebe8a
--- /dev/null
+++ b/tests/compression_conditions.phpt
@@ -0,0 +1,123 @@
+--TEST--
+Memcached compression test
+--SKIPIF--
+<?php if (!extension_loaded("memcached")) print "skip"; ?>
+--FILE--
+<?php
+include dirname (__FILE__) . '/config.inc';
+$m = memc_get_instance ();
+
+$short_data = "abcdefg";
+$data = file_get_contents(dirname(__FILE__) . '/testdata.res');
+
+set_error_handler(function($errno, $errstr, $errfile, $errline, array $errcontext) {
+	echo "$errstr\n";
+	return true;
+}, E_WARNING);
+
+function get_compression($name) {
+	switch (strtolower($name)) {
+		case 'zlib':
+			return Memcached::COMPRESSION_ZLIB;
+		case 'fastlz':
+			return Memcached::COMPRESSION_FASTLZ;
+		default:
+			echo "Strange compression type: $name\n";
+			return 0;
+	}
+}
+
+function fetch_with_compression($m, $key, $value, $set_compression = '', $factor = 1.3, $threshold = 2000) {
+ 	ini_set("memcached.compression_factor", $factor);
+ 	ini_set("memcached.compression_threshold", $threshold);
+	
+	$len=strlen($value);
+	echo "len=[$len] set=[$set_compression] factor=[$factor] threshold=[$threshold]\n";
+	
+	if (!$set_compression) {
+		$m->setOption(Memcached::OPT_COMPRESSION, false);
+	} else {
+		$m->setOption(Memcached::OPT_COMPRESSION, true);
+		$m->setOption(Memcached::OPT_COMPRESSION_TYPE, get_compression($set_compression));
+	}
+	
+	$m->set($key, $value, 1800);
+	
+	$value_back = $m->get($key);
+	var_dump($value === $value_back);
+}
+
+fetch_with_compression($m, 'hello01', $data, 'zlib',         1.3, 4);
+fetch_with_compression($m, 'hello02', $data, 'fastlz',       1.3, 4);
+fetch_with_compression($m, 'hello03', $data, '',             1.3, 4);
+fetch_with_compression($m, 'hello04', $short_data, 'zlib',   1.3, 4);
+fetch_with_compression($m, 'hello05', $short_data, 'fastlz', 1.3, 4);
+fetch_with_compression($m, 'hello06', $short_data, '',       1.3, 4);
+fetch_with_compression($m, 'hello11', $data, 'zlib',         0.3, 4);
+fetch_with_compression($m, 'hello12', $data, 'fastlz',       0.3, 4);
+fetch_with_compression($m, 'hello13', $data, '',             0.3, 4);
+fetch_with_compression($m, 'hello14', $short_data, 'zlib',   0.3, 4);
+fetch_with_compression($m, 'hello15', $short_data, 'fastlz', 0.3, 4);
+fetch_with_compression($m, 'hello16', $short_data, '',       0.3, 4);
+fetch_with_compression($m, 'hello21', $data, 'zlib',         1.3, 2000);
+fetch_with_compression($m, 'hello22', $data, 'fastlz',       1.3, 2000);
+fetch_with_compression($m, 'hello23', $data, '',             1.3, 2000);
+fetch_with_compression($m, 'hello24', $short_data, 'zlib',   1.3, 2000);
+fetch_with_compression($m, 'hello25', $short_data, 'fastlz', 1.3, 2000);
+fetch_with_compression($m, 'hello26', $short_data, '',       1.3, 2000);
+fetch_with_compression($m, 'hello31', $data, 'zlib',         0.3, 2000);
+fetch_with_compression($m, 'hello32', $data, 'fastlz',       0.3, 2000);
+fetch_with_compression($m, 'hello33', $data, '',             0.3, 2000);
+fetch_with_compression($m, 'hello34', $short_data, 'zlib',   0.3, 2000);
+fetch_with_compression($m, 'hello35', $short_data, 'fastlz', 0.3, 2000);
+fetch_with_compression($m, 'hello36', $short_data, '',       0.3, 2000);
+?>
+--EXPECT--
+len=[4877] set=[zlib] factor=[1.3] threshold=[4]
+bool(true)
+len=[4877] set=[fastlz] factor=[1.3] threshold=[4]
+bool(true)
+len=[4877] set=[] factor=[1.3] threshold=[4]
+bool(true)
+len=[7] set=[zlib] factor=[1.3] threshold=[4]
+bool(true)
+len=[7] set=[fastlz] factor=[1.3] threshold=[4]
+bool(true)
+len=[7] set=[] factor=[1.3] threshold=[4]
+bool(true)
+len=[4877] set=[zlib] factor=[0.3] threshold=[4]
+bool(true)
+len=[4877] set=[fastlz] factor=[0.3] threshold=[4]
+bool(true)
+len=[4877] set=[] factor=[0.3] threshold=[4]
+bool(true)
+len=[7] set=[zlib] factor=[0.3] threshold=[4]
+bool(true)
+len=[7] set=[fastlz] factor=[0.3] threshold=[4]
+bool(true)
+len=[7] set=[] factor=[0.3] threshold=[4]
+bool(true)
+len=[4877] set=[zlib] factor=[1.3] threshold=[2000]
+bool(true)
+len=[4877] set=[fastlz] factor=[1.3] threshold=[2000]
+bool(true)
+len=[4877] set=[] factor=[1.3] threshold=[2000]
+bool(true)
+len=[7] set=[zlib] factor=[1.3] threshold=[2000]
+bool(true)
+len=[7] set=[fastlz] factor=[1.3] threshold=[2000]
+bool(true)
+len=[7] set=[] factor=[1.3] threshold=[2000]
+bool(true)
+len=[4877] set=[zlib] factor=[0.3] threshold=[2000]
+bool(true)
+len=[4877] set=[fastlz] factor=[0.3] threshold=[2000]
+bool(true)
+len=[4877] set=[] factor=[0.3] threshold=[2000]
+bool(true)
+len=[7] set=[zlib] factor=[0.3] threshold=[2000]
+bool(true)
+len=[7] set=[fastlz] factor=[0.3] threshold=[2000]
+bool(true)
+len=[7] set=[] factor=[0.3] threshold=[2000]
+bool(true)