diff -up ntp-4.2.4p7/ntpd/ntp_loopfilter.c.freqmode ntp-4.2.4p7/ntpd/ntp_loopfilter.c
--- ntp-4.2.4p7/ntpd/ntp_loopfilter.c.freqmode	2009-05-28 15:19:30.000000000 +0200
+++ ntp-4.2.4p7/ntpd/ntp_loopfilter.c	2009-05-28 17:21:30.000000000 +0200
@@ -133,6 +133,7 @@ u_long	sys_clocktime;		/* last system cl
 u_long	pps_control;		/* last pps update */
 u_long	sys_tai;		/* UTC offset from TAI (s) */
 static void rstclock P((int, u_long, double)); /* transition function */
+static double direct_freq(double, u_long); /* calculate frequency directly */
 
 #ifdef KERNEL_PLL
 struct timex ntv;		/* kernel API parameters */
@@ -359,8 +360,7 @@ local_clock(
 			if (mu < clock_minstep)
 				return (0);
 
-			clock_frequency = (fp_offset - clock_offset) /
-			    mu;
+			clock_frequency = direct_freq(fp_offset, mu);
 
 			/* fall through to S_SPIK */
 
@@ -451,16 +451,16 @@ local_clock(
 
 		/*
 		 * In S_FREQ state ignore updates until the stepout
-		 * threshold. After that, correct the phase and
-		 * frequency and switch to S_SYNC state.
+		 * threshold. After that, compute the new frequency, but
+		 * do not adjust the phase or frequency until the next
+		 * update.
 		 */
 		case S_FREQ:
 			if (mu < clock_minstep)
 				return (0);
 
-			clock_frequency = (fp_offset - clock_offset) /
-			    mu;
-			rstclock(S_SYNC, peer->epoch, fp_offset);
+			clock_frequency = direct_freq(fp_offset, mu);
+			rstclock(S_SYNC, peer->epoch, 0);
 			break;
 
 		/*
@@ -590,8 +590,7 @@ local_clock(
 			 */
 			if (clock_frequency != 0) {
 				ntv.modes |= MOD_FREQUENCY;
-				ntv.freq = (int32)((clock_frequency +
-				    drift_comp) * 65536e6);
+				ntv.freq = (int32)(clock_frequency * 65536e6);
 			}
 			ntv.esterror = (u_int32)(clock_jitter * 1e6);
 			ntv.maxerror = (u_int32)((sys_rootdelay / 2 +
@@ -837,6 +836,43 @@ rstclock(
 	last_offset = clock_offset = offset;
 }
 
+/*
+ * calc_freq - calculate frequency directly
+ *
+ * This is very carefully done. When the offset is first computed at the
+ * first update, a residual frequency component results. Subsequently,
+ * updates are suppresed until the end of the measurement interval while
+ * the offset is amortized. At the end of the interval the frequency is
+ * calculated from the current offset, residual offset, length of the
+ * interval and residual frequency component. At the same time the
+ * frequenchy file is armed for update at the next hourly stats.
+ */
+static double
+direct_freq(
+	double	fp_offset,
+	u_long mu
+	)
+{
+
+#ifdef KERNEL_PLL
+	/*
+	 * If the kernel is enabled, we need the residual offset to
+	 * calculate the frequency correction.
+	 */
+	if (pll_control && kern_enable) {
+		memset(&ntv,  0, sizeof(ntv));
+		ntp_adjtime(&ntv);
+#ifdef STA_NANO
+		clock_offset = ntv.offset / 1e9;
+#else /* STA_NANO */
+		clock_offset = ntv.offset / 1e6;
+#endif /* STA_NANO */
+		drift_comp = ntv.freq / 65536e6;
+	}
+#endif /* KERNEL_PLL */
+	return (fp_offset - clock_offset) / mu + drift_comp;
+}
+
 
 int huffpuff_enabled()
 {