diff --git a/mercurial/hg.py b/mercurial/hg.py
--- a/mercurial/hg.py
+++ b/mercurial/hg.py
@@ -179,7 +179,7 @@ def clone(ui, source, dest=None, pull=Fa
             revs = [src_repo.lookup(r) for r in rev]
 
         if dest_repo.local():
-            dest_repo.pull(src_repo, heads=revs)
+            dest_repo.clone(src_repo, heads=revs, pull=pull)
         elif src_repo.local():
             src_repo.push(dest_repo, revs=revs)
         else:
diff --git a/mercurial/hgweb/hgweb_mod.py b/mercurial/hgweb/hgweb_mod.py
--- a/mercurial/hgweb/hgweb_mod.py
+++ b/mercurial/hgweb/hgweb_mod.py
@@ -11,7 +11,8 @@ import os.path
 import mimetypes
 from mercurial.demandload import demandload
 demandload(globals(), "re zlib ConfigParser mimetools cStringIO sys tempfile")
-demandload(globals(), "mercurial:mdiff,ui,hg,util,archival,templater")
+demandload(globals(), "mercurial:mdiff,ui,hg,util,archival,streamclone")
+demandload(globals(), "mercurial:templater")
 demandload(globals(), "mercurial.hgweb.common:get_mtime,staticfile")
 from mercurial.node import *
 from mercurial.i18n import gettext as _
@@ -859,7 +860,7 @@ class hgweb(object):
                   or self.t("error", error="%r not found" % fname))
 
     def do_capabilities(self, req):
-        resp = 'unbundle'
+        resp = 'unbundle stream=%d' % (self.repo.revlogversion,)
         req.httphdr("application/mercurial-0.1", length=len(resp))
         req.write(resp)
 
@@ -950,3 +951,7 @@ class hgweb(object):
         finally:
             fp.close()
             os.unlink(tempname)
+
+    def do_stream_out(self, req):
+        req.httphdr("application/mercurial-0.1")
+        streamclone.stream_out(self.repo, req)
diff --git a/mercurial/httprepo.py b/mercurial/httprepo.py
--- a/mercurial/httprepo.py
+++ b/mercurial/httprepo.py
@@ -326,6 +326,9 @@ class httprepository(remoterepository):
             fp.close()
             os.unlink(tempname)
 
+    def stream_out(self):
+        return self.do_cmd('stream_out')
+
 class httpsrepository(httprepository):
     def __init__(self, ui, path):
         if not has_https:
diff --git a/mercurial/localrepo.py b/mercurial/localrepo.py
--- a/mercurial/localrepo.py
+++ b/mercurial/localrepo.py
@@ -8,17 +8,19 @@
 from node import *
 from i18n import gettext as _
 from demandload import *
+import repo
 demandload(globals(), "appendfile changegroup")
-demandload(globals(), "changelog dirstate filelog manifest repo context")
+demandload(globals(), "changelog dirstate filelog manifest context")
 demandload(globals(), "re lock transaction tempfile stat mdiff errno ui")
-demandload(globals(), "os revlog util")
+demandload(globals(), "os revlog time util")
 
-class localrepository(object):
+class localrepository(repo.repository):
     capabilities = ()
 
     def __del__(self):
         self.transhandle = None
     def __init__(self, parentui, path=None, create=0):
+        repo.repository.__init__(self)
         if not path:
             p = os.getcwd()
             while not os.path.isdir(os.path.join(p, ".hg")):
@@ -1183,7 +1185,7 @@ class localrepository(object):
         # unbundle assumes local user cannot lock remote repo (new ssh
         # servers, http servers).
 
-        if 'unbundle' in remote.capabilities:
+        if remote.capable('unbundle'):
             return self.push_unbundle(remote, force, revs)
         return self.push_addchangegroup(remote, force, revs)
 
@@ -2201,6 +2203,47 @@ class localrepository(object):
             self.ui.warn(_("%d integrity errors encountered!\n") % errors[0])
             return 1
 
+    def stream_in(self, remote):
+        self.ui.status(_('streaming all changes\n'))
+        fp = remote.stream_out()
+        total_files, total_bytes = map(int, fp.readline().split(' ', 1))
+        self.ui.status(_('%d files to transfer, %s of data\n') %
+                       (total_files, util.bytecount(total_bytes)))
+        start = time.time()
+        for i in xrange(total_files):
+            name, size = fp.readline().split('\0', 1)
+            size = int(size)
+            self.ui.debug('adding %s (%s)\n' % (name, util.bytecount(size)))
+            ofp = self.opener(name, 'w')
+            for chunk in util.filechunkiter(fp, limit=size):
+                ofp.write(chunk)
+            ofp.close()
+        elapsed = time.time() - start
+        self.ui.status(_('transferred %s in %.1f seconds (%s/sec)\n') %
+                       (util.bytecount(total_bytes), elapsed,
+                        util.bytecount(total_bytes / elapsed)))
+        self.reload()
+        return len(self.heads()) + 1
+        
+    def clone(self, remote, heads=[], pull=False):
+        '''clone remote repository.
+        if possible, changes are streamed from remote server.
+
+        keyword arguments:
+        heads: list of revs to clone (forces use of pull)
+        pull: force use of pull, even if remote can stream'''
+
+        # now, all clients that can stream can read repo formats
+        # supported by all servers that can stream.
+
+        # if revlog format changes, client will have to check version
+        # and format flags on "stream" capability, and stream only if
+        # compatible.
+
+        if not pull and not heads and remote.capable('stream'):
+            return self.stream_in(remote)
+        return self.pull(remote, heads)
+
 # used to avoid circular references so destructors work
 def aftertrans(base):
     p = base
diff --git a/mercurial/remoterepo.py b/mercurial/remoterepo.py
--- a/mercurial/remoterepo.py
+++ b/mercurial/remoterepo.py
@@ -5,7 +5,9 @@
 # This software may be used and distributed according to the terms
 # of the GNU General Public License, incorporated herein by reference.
 
-class remoterepository(object):
+import repo
+
+class remoterepository(repo.repository):
     def dev(self):
         return -1
 
diff --git a/mercurial/repo.py b/mercurial/repo.py
--- a/mercurial/repo.py
+++ b/mercurial/repo.py
@@ -5,4 +5,19 @@
 # This software may be used and distributed according to the terms
 # of the GNU General Public License, incorporated herein by reference.
 
-class RepoError(Exception): pass
+class RepoError(Exception):
+    pass
+
+class repository(object):
+    def capable(self, name):
+        '''tell whether repo supports named capability.
+        return False if not supported.
+        if boolean capability, return True.
+        if string capability, return string.'''
+        name_eq = name + '='
+        for cap in self.capabilities:
+            if name == cap:
+                return True
+            if cap.startswith(name_eq):
+                return cap[len(name_eq):]
+        return False
diff --git a/mercurial/sshrepo.py b/mercurial/sshrepo.py
--- a/mercurial/sshrepo.py
+++ b/mercurial/sshrepo.py
@@ -198,3 +198,6 @@ class sshrepository(remoterepository):
         if not r:
             return 1
         return int(r)
+
+    def stream_out(self):
+        return self.do_cmd('stream_out')
diff --git a/mercurial/sshserver.py b/mercurial/sshserver.py
--- a/mercurial/sshserver.py
+++ b/mercurial/sshserver.py
@@ -8,7 +8,7 @@
 from demandload import demandload
 from i18n import gettext as _
 from node import *
-demandload(globals(), "os sys tempfile util")
+demandload(globals(), "os streamclone sys tempfile util")
 
 class sshserver(object):
     def __init__(self, ui, repo):
@@ -60,7 +60,7 @@ class sshserver(object):
         capabilities: space separated list of tokens
         '''
 
-        r = "capabilities: unbundle\n"
+        r = "capabilities: unbundle stream=%d\n" % (self.repo.revlogversion,)
         self.respond(r)
 
     def do_lock(self):
@@ -167,3 +167,5 @@ class sshserver(object):
             fp.close()
             os.unlink(tempname)
 
+    def do_stream_out(self):
+        streamclone.stream_out(self.repo, self.fout)
diff --git a/mercurial/streamclone.py b/mercurial/streamclone.py
new file mode 100644
--- /dev/null
+++ b/mercurial/streamclone.py
@@ -0,0 +1,82 @@
+# streamclone.py - streaming clone server support for mercurial
+#
+# Copyright 2006 Vadim Gelfer <vadim.gelfer@gmail.com>
+#
+# This software may be used and distributed according to the terms
+# of the GNU General Public License, incorporated herein by reference.
+
+from demandload import demandload
+from i18n import gettext as _
+demandload(globals(), "os stat util")
+
+# if server supports streaming clone, it advertises "stream"
+# capability with value that is version+flags of repo it is serving.
+# client only streams if it can read that repo format.
+
+def walkrepo(root):
+    '''iterate over metadata files in repository.
+    walk in natural (sorted) order.
+    yields 2-tuples: name of .d or .i file, size of file.'''
+
+    strip_count = len(root) + len(os.sep)
+    def walk(path, recurse):
+        ents = os.listdir(path)
+        ents.sort()
+        for e in ents:
+            pe = os.path.join(path, e)
+            st = os.lstat(pe)
+            if stat.S_ISDIR(st.st_mode):
+                if recurse:
+                    for x in walk(pe, True):
+                        yield x
+            else:
+                if not stat.S_ISREG(st.st_mode) or len(e) < 2:
+                    continue
+                sfx = e[-2:]
+                if sfx in ('.d', '.i'):
+                    yield pe[strip_count:], st.st_size
+    # write file data first
+    for x in walk(os.path.join(root, 'data'), True):
+        yield x
+    # write manifest before changelog
+    meta = list(walk(root, False))
+    meta.sort(reverse=True)
+    for x in meta:
+        yield x
+
+# stream file format is simple.
+#
+# server writes out line that says how many files, how many total
+# bytes.  separator is ascii space, byte counts are strings.
+#
+# then for each file:
+#
+#   server writes out line that says file name, how many bytes in
+#   file.  separator is ascii nul, byte count is string.
+#
+#   server writes out raw file data.
+
+def stream_out(repo, fileobj):
+    '''stream out all metadata files in repository.
+    writes to file-like object, must support write() and optional flush().'''
+    # get consistent snapshot of repo. lock during scan so lock not
+    # needed while we stream, and commits can happen.
+    lock = repo.lock()
+    repo.ui.debug('scanning\n')
+    entries = []
+    total_bytes = 0
+    for name, size in walkrepo(repo.path):
+        entries.append((name, size))
+        total_bytes += size
+    lock.release()
+
+    repo.ui.debug('%d files, %d bytes to transfer\n' %
+                  (len(entries), total_bytes))
+    fileobj.write('%d %d\n' % (len(entries), total_bytes))
+    for name, size in entries:
+        repo.ui.debug('sending %s (%d bytes)\n' % (name, size))
+        fileobj.write('%s\0%d\n' % (name, size))
+        for chunk in util.filechunkiter(repo.opener(name), limit=size):
+            fileobj.write(chunk)
+    flush = getattr(fileobj, 'flush', None)
+    if flush: flush()
diff --git a/mercurial/util.py b/mercurial/util.py
--- a/mercurial/util.py
+++ b/mercurial/util.py
@@ -961,3 +961,24 @@ def rcpath():
         else:
             _rcpath = os_rcpath()
     return _rcpath
+
+def bytecount(nbytes):
+    '''return byte count formatted as readable string, with units'''
+
+    units = (
+        (100, 1<<30, _('%.0f GB')),
+        (10, 1<<30, _('%.1f GB')),
+        (1, 1<<30, _('%.2f GB')),
+        (100, 1<<20, _('%.0f MB')),
+        (10, 1<<20, _('%.1f MB')),
+        (1, 1<<20, _('%.2f MB')),
+        (100, 1<<10, _('%.0f KB')),
+        (10, 1<<10, _('%.1f KB')),
+        (1, 1<<10, _('%.2f KB')),
+        (1, 1, _('%.0f bytes')),
+        )
+
+    for multiplier, divisor, format in units:
+        if nbytes >= divisor * multiplier:
+            return format % (nbytes / float(divisor))
+    return units[-1][2] % nbytes
diff --git a/tests/test-http b/tests/test-http
new file mode 100755
--- /dev/null
+++ b/tests/test-http
@@ -0,0 +1,25 @@
+#!/bin/sh
+
+mkdir test
+cd test
+echo foo>foo
+hg init
+hg addremove
+hg commit -m 1
+hg verify
+hg serve -p 20059 -d --pid-file=hg.pid
+cat hg.pid >> $DAEMON_PIDS
+cd ..
+
+echo % clone via stream
+http_proxy= hg clone http://localhost:20059/ copy 2>&1 | \
+  sed -e 's/[0-9][0-9.]*/XXX/g'
+cd copy
+hg verify
+
+cd ..
+
+echo % clone via pull
+http_proxy= hg clone --pull http://localhost:20059/ copy-pull
+cd copy-pull
+hg verify
diff --git a/tests/test-http-proxy b/tests/test-http-proxy
--- a/tests/test-http-proxy
+++ b/tests/test-http-proxy
@@ -13,17 +13,27 @@ echo $! > proxy.pid)
 cat proxy.pid >> $DAEMON_PIDS
 sleep 2
 
-echo %% url for proxy
-http_proxy=http://localhost:20060/ hg --config http_proxy.always=True clone http://localhost:20059/ b
+echo %% url for proxy, stream
+http_proxy=http://localhost:20060/ hg --config http_proxy.always=True clone http://localhost:20059/ b | \
+  sed -e 's/[0-9][0-9.]*/XXX/g'
+cd b
+hg verify
+cd ..
+
+echo %% url for proxy, pull
+http_proxy=http://localhost:20060/ hg --config http_proxy.always=True clone --pull http://localhost:20059/ b-pull
+cd b-pull
+hg verify
+cd ..
 
 echo %% host:port for proxy
-http_proxy=localhost:20060 hg clone --config http_proxy.always=True http://localhost:20059/ c
+http_proxy=localhost:20060 hg clone --pull --config http_proxy.always=True http://localhost:20059/ c
 
 echo %% proxy url with user name and password
-http_proxy=http://user:passwd@localhost:20060 hg clone --config http_proxy.always=True http://localhost:20059/ d
+http_proxy=http://user:passwd@localhost:20060 hg clone --pull --config http_proxy.always=True http://localhost:20059/ d
 
 echo %% url with user name and password
-http_proxy=http://user:passwd@localhost:20060 hg clone --config http_proxy.always=True http://user:passwd@localhost:20059/ e
+http_proxy=http://user:passwd@localhost:20060 hg clone --pull --config http_proxy.always=True http://user:passwd@localhost:20059/ e
 
 echo %% bad host:port for proxy
 http_proxy=localhost:20061 hg clone --config http_proxy.always=True http://localhost:20059/ f
diff --git a/tests/test-http-proxy.out b/tests/test-http-proxy.out
--- a/tests/test-http-proxy.out
+++ b/tests/test-http-proxy.out
@@ -1,11 +1,26 @@
 adding a
-%% url for proxy
+%% url for proxy, stream
+streaming all changes
+XXX files to transfer, XXX bytes of data
+transferred XXX bytes in XXX seconds (XXX KB/sec)
+XXX files updated, XXX files merged, XXX files removed, XXX files unresolved
+checking changesets
+checking manifests
+crosschecking files in changesets and manifests
+checking files
+1 files, 1 changesets, 1 total revisions
+%% url for proxy, pull
 requesting all changes
 adding changesets
 adding manifests
 adding file changes
 added 1 changesets with 1 changes to 1 files
 1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+checking changesets
+checking manifests
+crosschecking files in changesets and manifests
+checking files
+1 files, 1 changesets, 1 total revisions
 %% host:port for proxy
 requesting all changes
 adding changesets
diff --git a/tests/test-http.out b/tests/test-http.out
new file mode 100644
--- /dev/null
+++ b/tests/test-http.out
@@ -0,0 +1,29 @@
+(the addremove command is deprecated; use add and remove --after instead)
+adding foo
+checking changesets
+checking manifests
+crosschecking files in changesets and manifests
+checking files
+1 files, 1 changesets, 1 total revisions
+% clone via stream
+streaming all changes
+XXX files to transfer, XXX bytes of data
+transferred XXX bytes in XXX seconds (XXX KB/sec)
+XXX files updated, XXX files merged, XXX files removed, XXX files unresolved
+checking changesets
+checking manifests
+crosschecking files in changesets and manifests
+checking files
+1 files, 1 changesets, 1 total revisions
+% clone via pull
+requesting all changes
+adding changesets
+adding manifests
+adding file changes
+added 1 changesets with 1 changes to 1 files
+1 files updated, 0 files merged, 0 files removed, 0 files unresolved
+checking changesets
+checking manifests
+crosschecking files in changesets and manifests
+checking files
+1 files, 1 changesets, 1 total revisions
diff --git a/tests/test-pull b/tests/test-pull
--- a/tests/test-pull
+++ b/tests/test-pull
@@ -11,7 +11,7 @@ hg serve -p 20059 -d --pid-file=hg.pid
 cat hg.pid >> $DAEMON_PIDS
 cd ..
 
-http_proxy= hg clone http://localhost:20059/ copy
+http_proxy= hg clone --pull http://localhost:20059/ copy
 cd copy
 hg verify
 hg co
diff --git a/tests/test-ssh b/tests/test-ssh
--- a/tests/test-ssh
+++ b/tests/test-ssh
@@ -30,8 +30,15 @@ hg ci -A -m "init" -d "1000000 0" foo
 
 cd ..
 
-echo "# clone remote"
-hg clone -e ./dummyssh ssh://user@dummy/remote local
+echo "# clone remote via stream"
+hg clone -e ./dummyssh ssh://user@dummy/remote local-stream 2>&1 | \
+  sed -e 's/[0-9][0-9.]*/XXX/g'
+cd local-stream
+hg verify
+cd ..
+
+echo "# clone remote via pull"
+hg clone -e ./dummyssh --pull ssh://user@dummy/remote local
 
 echo "# verify"
 cd local
diff --git a/tests/test-ssh.out b/tests/test-ssh.out
--- a/tests/test-ssh.out
+++ b/tests/test-ssh.out
@@ -1,5 +1,15 @@
 # creating 'remote'
-# clone remote
+# clone remote via stream
+streaming all changes
+XXX files to transfer, XXX bytes of data
+transferred XXX bytes in XXX seconds (XXX KB/sec)
+XXX files updated, XXX files merged, XXX files removed, XXX files unresolved
+checking changesets
+checking manifests
+crosschecking files in changesets and manifests
+checking files
+1 files, 1 changesets, 1 total revisions
+# clone remote via pull
 requesting all changes
 adding changesets
 adding manifests
@@ -70,6 +80,7 @@ remote: added 1 changesets with 1 change
 Got arguments 1:user@dummy 2:hg -R remote serve --stdio 3: 4: 5:
 Got arguments 1:user@dummy 2:hg -R remote serve --stdio 3: 4: 5:
 Got arguments 1:user@dummy 2:hg -R remote serve --stdio 3: 4: 5:
+Got arguments 1:user@dummy 2:hg -R remote serve --stdio 3: 4: 5:
 Got arguments 1:user@dummy 2:hg -R local serve --stdio 3: 4: 5:
 Got arguments 1:user@dummy 2:hg -R remote serve --stdio 3: 4: 5:
 Got arguments 1:user@dummy 2:hg -R remote serve --stdio 3: 4: 5: