diff --git a/meta/classes/cross-canadian.bbclass b/meta/classes/cross-canadian.bbclass
index e5453848ae..29ee99042b 100644
--- a/meta/classes/cross-canadian.bbclass
+++ b/meta/classes/cross-canadian.bbclass
@@ -44,9 +44,9 @@ target_prefix := "${prefix}"
 target_exec_prefix := "${exec_prefix}"
 
 # Change to place files in SDKPATH
-prefix = "${SDKPATH}"
-exec_prefix = "${SDKPATH}"
-base_prefix = "${SDKPATH}"
+base_prefix = "${SDKPATHNATIVE}"
+prefix = "${SDKPATHNATIVE}${prefix_nativesdk}"
+exec_prefix = "${SDKPATHNATIVE}${prefix_nativesdk}"
 
 FILES_${PN} = "${prefix}"
 FILES_${PN}-dbg += "${prefix}/.debug \
@@ -56,5 +56,5 @@ FILES_${PN}-dbg += "${prefix}/.debug \
 export PKG_CONFIG_DIR = "${STAGING_DIR_HOST}${layout_libdir}/pkgconfig"
 export PKG_CONFIG_SYSROOT_DIR = "${STAGING_DIR_HOST}"
 
-# Cross-canadian packages need to pull in nativesdk so's, sorry for ugliness
+# Cross-canadian packages need to pull in nativesdk dynamic libs
 SHLIBSDIR = "${STAGING_DIR}/${SDK_ARCH}-nativesdk-pokysdk-${BUILD_OS}/shlibs"
diff --git a/meta/classes/nativesdk.bbclass b/meta/classes/nativesdk.bbclass
index 2c897c6076..892bae5ecf 100644
--- a/meta/classes/nativesdk.bbclass
+++ b/meta/classes/nativesdk.bbclass
@@ -37,9 +37,9 @@ CXXFLAGS = "${BUILDSDK_CFLAGS}"
 LDFLAGS = "${BUILDSDK_LDFLAGS}"
 
 # Change to place files in SDKPATH
-prefix = "${SDKPATH}"
-exec_prefix = "${SDKPATH}"
-base_prefix = "${SDKPATH}"
+base_prefix = "${SDKPATHNATIVE}"
+prefix = "${SDKPATHNATIVE}${prefix_nativesdk}"
+exec_prefix = "${SDKPATHNATIVE}${prefix_nativesdk}"
 
 FILES_${PN} += "${prefix}"
 FILES_${PN}-dbg += "${prefix}/.debug \
diff --git a/meta/conf/bitbake.conf b/meta/conf/bitbake.conf
index 9d8e59457c..492ed9678a 100644
--- a/meta/conf/bitbake.conf
+++ b/meta/conf/bitbake.conf
@@ -43,6 +43,9 @@ includedir_native = "${prefix_native}/include"
 libdir_native = "${prefix_native}/lib"
 datadir_native = "${prefix_native}/share"
 bindir_cross = "/bin"
+prefix_nativesdk = "/usr"
+bindir_nativesdk = "${prefix_nativesdk}/bin"
+libdir_nativesdk = "${prefix_nativesdk}/lib"
 
 #
 # Cross recipes need to know about the target layout
@@ -290,6 +293,7 @@ PKGDATA_DIR = "${TMPDIR}/pkgdata/${MULTIMACH_TARGET_SYS}"
 
 SDK_NAME = "${DISTRO}/${TARGET_ARCH}"
 SDKPATH = "/usr/local/${SDK_NAME}"
+SDKPATHNATIVE = "${SDKPATH}/sysroots/${SDK_SYS}"
 
 ##################################################################
 # Kernel info.
diff --git a/meta/conf/distro/poky.conf b/meta/conf/distro/poky.conf
index 57231fd6ef..951e156c25 100644
--- a/meta/conf/distro/poky.conf
+++ b/meta/conf/distro/poky.conf
@@ -58,8 +58,8 @@ require conf/distro/include/poky-${POKYMODE}.inc
 POKYLIBC ?= "glibc"
 require conf/distro/include/poky-${POKYLIBC}.inc
 
-SDK_NAME = "${DISTRO}-${POKYMODE}-${POKYLIBC}-${SDK_ARCH}-${TARGET_ARCH}"
-SDKPATH = "/usr/local/${DISTRO}/${POKYMODE}-${POKYLIBC}"
+SDK_NAME = "${DISTRO}-${POKYLIBC}-${SDK_ARCH}-${TARGET_ARCH}"
+SDKPATH = "/opt/${DISTRO}"
 
 CACHE = "${TMPDIR}/cache/${POKYMODE}-${POKYLIBC}${@['', '/' + str(bb.data.getVar('MACHINE', d, 1))][bool(bb.data.getVar('MACHINE', d, 1))]}${@['', '/' + str(bb.data.getVar('SDKMACHINE', d, 1))][bool(bb.data.getVar('SDKMACHINE', d, 1))]}"
 
diff --git a/meta/packages/gcc/gcc-crosssdk-initial.inc b/meta/packages/gcc/gcc-crosssdk-initial.inc
index 4b8346b004..794a953472 100644
--- a/meta/packages/gcc/gcc-crosssdk-initial.inc
+++ b/meta/packages/gcc/gcc-crosssdk-initial.inc
@@ -1,7 +1,7 @@
 inherit crosssdk
 
-SYSTEMHEADERS = "${SDKPATH}/include"
-SYSTEMLIBS1 = "${SDKPATH}/lib/"
+SYSTEMHEADERS = "${SDKPATHNATIVE}${prefix_nativesdk}/include"
+SYSTEMLIBS1 = "${SDKPATHNATIVE}${libdir_nativesdk}/"
 
 DEPENDS = "virtual/${TARGET_PREFIX}binutils-crosssdk gettext-native"
 PROVIDES = "virtual/${TARGET_PREFIX}gcc-initial-crosssdk"
diff --git a/meta/packages/gcc/gcc-crosssdk-intermediate.inc b/meta/packages/gcc/gcc-crosssdk-intermediate.inc
index 6034360050..5b88d33139 100644
--- a/meta/packages/gcc/gcc-crosssdk-intermediate.inc
+++ b/meta/packages/gcc/gcc-crosssdk-intermediate.inc
@@ -1,7 +1,7 @@
 inherit crosssdk
 
-SYSTEMHEADERS = "${SDKPATH}/include"
-SYSTEMLIBS1 = "${SDKPATH}/lib/"
+SYSTEMHEADERS = "${SDKPATHNATIVE}${prefix_nativesdk}/include"
+SYSTEMLIBS1 = "${SDKPATHNATIVE}${libdir_nativesdk}/"
 
 DEPENDS = "virtual/${TARGET_PREFIX}binutils-crosssdk gettext-native"
 DEPENDS += "virtual/${TARGET_PREFIX}libc-initial-nativesdk"
diff --git a/meta/packages/gcc/gcc-crosssdk.inc b/meta/packages/gcc/gcc-crosssdk.inc
index e2252bbfce..be2d0b0a28 100644
--- a/meta/packages/gcc/gcc-crosssdk.inc
+++ b/meta/packages/gcc/gcc-crosssdk.inc
@@ -1,7 +1,7 @@
 inherit crosssdk
 
-SYSTEMHEADERS = "${SDKPATH}/include"
-SYSTEMLIBS1 = "${SDKPATH}/lib/"
+SYSTEMHEADERS = "${SDKPATHNATIVE}${prefix_nativesdk}/include"
+SYSTEMLIBS1 = "${SDKPATHNATIVE}${libdir_nativesdk}/"
 
 GCCMULTILIB = "--disable-multilib"
 
diff --git a/meta/packages/meta/meta-toolchain.bb b/meta/packages/meta/meta-toolchain.bb
index 9ae5554eaa..43b4f027c4 100644
--- a/meta/packages/meta/meta-toolchain.bb
+++ b/meta/packages/meta/meta-toolchain.bb
@@ -6,11 +6,12 @@ inherit meta
 
 SDK_DIR = "${WORKDIR}/sdk"
 SDK_OUTPUT = "${SDK_DIR}/image"
-SDK_OUTPUT2 = "${SDK_DIR}/image-extras"
 SDK_DEPLOY = "${TMPDIR}/deploy/sdk"
 
+SDKTARGETSYSROOT = "${SDKPATH}/sysroots/${TARGET_SYS}"
+
 IPKG_HOST = "opkg-cl -f ${IPKGCONF_SDK} -o ${SDK_OUTPUT}"
-IPKG_TARGET = "opkg-cl -f ${IPKGCONF_TARGET} -o ${SDK_OUTPUT}/${SDKPATH}/${TARGET_SYS}"
+IPKG_TARGET = "opkg-cl -f ${IPKGCONF_TARGET} -o ${SDK_OUTPUT}/${SDKTARGETSYSROOT}"
 
 TOOLCHAIN_HOST_TASK ?= "task-sdk-host"
 TOOLCHAIN_TARGET_TASK ?= "task-poky-standalone-sdk-target task-poky-standalone-sdk-target-dbg"
@@ -22,10 +23,9 @@ EXCLUDE_FROM_WORLD = "1"
 
 do_populate_sdk() {
 	rm -rf ${SDK_OUTPUT}
-	rm -rf ${SDK_OUTPUT2}
 	mkdir -p ${SDK_OUTPUT}
 	mkdir -p ${SDK_OUTPUT}${libdir}/opkg/
-	mkdir -p ${SDK_OUTPUT}/${SDKPATH}/${TARGET_SYS}${libdir}/opkg/
+	mkdir -p ${SDK_OUTPUT}/${SDKTARGETSYSROOT}${libdir}/opkg/
 
 	rm -f ${IPKGCONF_TARGET}
 	touch ${IPKGCONF_TARGET}
@@ -45,58 +45,32 @@ do_populate_sdk() {
 	${IPKG_TARGET} update
 	${IPKG_TARGET} install ${TOOLCHAIN_TARGET_TASK}
 
-	install -d ${SDK_OUTPUT}/${SDKPATH}/usr/lib/opkg
-	mv ${SDK_OUTPUT}/usr/lib/opkg/* ${SDK_OUTPUT}/${SDKPATH}/usr/lib/opkg/
-	rm -Rf ${SDK_OUTPUT}/usr/lib
+	install -d ${SDK_OUTPUT}/${SDKPATHNATIVE}${libdir_nativesdk}/opkg
+	mv ${SDK_OUTPUT}/usr/lib/opkg/* ${SDK_OUTPUT}/${SDKPATHNATIVE}${libdir_nativesdk}/opkg/
+	rm -Rf ${SDK_OUTPUT}/usr
 
 	# Don't ship any libGL in the SDK
-	rm -rf ${SDK_OUTPUT}/${SDKPATH}/usr/lib/libGL*
+	rm -rf ${SDK_OUTPUT}/${SDKPATHNATIVE}${libdir_nativesdk}/libGL*
 
-	install -d ${SDK_OUTPUT}/${SDKPATH}/${TARGET_SYS}/${sysconfdir}
-	install -m 0644 ${IPKGCONF_TARGET} ${IPKGCONF_SDK} ${SDK_OUTPUT}/${SDKPATH}/${TARGET_SYS}/${sysconfdir}/
+	install -d ${SDK_OUTPUT}/${SDKTARGETSYSROOT}/${sysconfdir}
+	install -m 0644 ${IPKGCONF_TARGET} ${IPKGCONF_SDK} ${SDK_OUTPUT}/${SDKTARGETSYSROOT}/${sysconfdir}/
 
-	install -d ${SDK_OUTPUT}/${SDKPATH}/${sysconfdir}
-	install -m 0644 ${IPKGCONF_SDK} ${SDK_OUTPUT}/${SDKPATH}/${sysconfdir}/
+	install -d ${SDK_OUTPUT}/${SDKPATHNATIVE}/${sysconfdir}
+	install -m 0644 ${IPKGCONF_SDK} ${SDK_OUTPUT}/${SDKPATHNATIVE}/${sysconfdir}/
 
-	# extract and store ipks, pkgdata and shlibs data
-	target_pkgs=`cat ${SDK_OUTPUT}/${SDKPATH}/${TARGET_SYS}/usr/lib/opkg/status | grep Package: | cut -f 2 -d ' '`
-	mkdir -p ${SDK_OUTPUT2}/${SDKPATH}/ipk/
-	mkdir -p ${SDK_OUTPUT2}/${SDKPATH}/pkgdata/runtime/
-	mkdir -p ${SDK_OUTPUT2}/${SDKPATH}/${TARGET_SYS}/shlibs/
-	for pkg in $target_pkgs ; do
-		for arch in $revipkgarchs; do
-			pkgnames=${DEPLOY_DIR_IPK}/$arch/${pkg}_*_$arch.ipk
-			if [ -e $pkgnames ]; then
-				echo "Found $pkgnames"
-				cp $pkgnames ${SDK_OUTPUT2}/${SDKPATH}/ipk/
-				orig_pkg=`opkg-list-fields $pkgnames | grep OE: | cut -d ' ' -f2`
-				pkg_subdir=$arch${TARGET_VENDOR}${@['-' + bb.data.getVar('TARGET_OS', d, 1), ''][bb.data.getVar('TARGET_OS', d, 1) == ('' or 'custom')]}
-				mkdir -p ${SDK_OUTPUT2}/${SDKPATH}/pkgdata/$pkg_subdir/runtime
-				cp ${TMPDIR}/pkgdata/$pkg_subdir/$orig_pkg ${SDK_OUTPUT2}/${SDKPATH}/pkgdata/$pkg_subdir/
-				subpkgs=`cat ${TMPDIR}/pkgdata/$pkg_subdir/$orig_pkg | grep PACKAGES: | cut -b 10-`
-				for subpkg in $subpkgs; do
-					cp ${TMPDIR}/pkgdata/$pkg_subdir/runtime/$subpkg ${SDK_OUTPUT2}/${SDKPATH}/pkgdata/$pkg_subdir/runtime/
-					if [ -e ${TMPDIR}/pkgdata/$pkg_subdir/runtime/$subpkg.packaged ];then
-						cp ${TMPDIR}/pkgdata/$pkg_subdir/runtime/$subpkg.packaged ${SDK_OUTPUT2}/${SDKPATH}/pkgdata/$pkg_subdir/runtime/
-					fi
-					if [ -e ${STAGING_DIR_TARGET}/shlibs/$subpkg.list ]; then
-						cp ${STAGING_DIR_TARGET}/shlibs/$subpkg.* ${SDK_OUTPUT2}/${SDKPATH}/${TARGET_SYS}/shlibs/
-					fi
-				done
-				break
-			fi
-		done
-	done
+	# Can copy pstage files here
+	# target_pkgs=`cat ${SDK_OUTPUT}/${SDKTARGETSYSROOT}/usr/lib/opkg/status | grep Package: | cut -f 2 -d ' '`
 
 	# Fix or remove broken .la files
-	for i in `find ${SDK_OUTPUT}/${SDKPATH}/${TARGET_SYS} -name \*.la`; do
-		sed -i 	-e "/^dependency_libs=/s,\([[:space:]']\)${base_libdir},\1${SDKPATH}/${TARGET_SYS}${base_libdir},g" \
-			-e "/^dependency_libs=/s,\([[:space:]']\)${libdir},\1${SDKPATH}/${TARGET_SYS}${libdir},g" \
-			-e "/^dependency_libs=/s,\-\([LR]\)${base_libdir},-\1${SDKPATH}/${TARGET_SYS}${base_libdir},g" \
-			-e "/^dependency_libs=/s,\-\([LR]\)${libdir},-\1${SDKPATH}/${TARGET_SYS}${libdir},g" \
+	for i in `find ${SDK_OUTPUT}/${SDKTARGETSYSROOT} -name \*.la`; do
+		sed -i 	-e "/^dependency_libs=/s,\([[:space:]']\)${base_libdir},\1${SDKTARGETSYSROOT}${base_libdir},g" \
+			-e "/^dependency_libs=/s,\([[:space:]']\)${libdir},\1${SDKTARGETSYSROOT}${libdir},g" \
+			-e "/^dependency_libs=/s,\-\([LR]\)${base_libdir},-\1${SDKTARGETSYSROOT}${base_libdir},g" \
+			-e "/^dependency_libs=/s,\-\([LR]\)${libdir},-\1${SDKTARGETSYSROOT}${libdir},g" \
 			-e 's/^installed=yes$/installed=no/' $i
 	done
-	rm -f ${SDK_OUTPUT}/${SDKPATH}/lib/*.la
+	#rm -f ${SDK_OUTPUT}/${SDKPATHNATIVE}/lib/*.la
+	rm -f ${SDK_OUTPUT}/${SDKPATHNATIVE}${libdir_nativesdk}/*.la
 
 	# Setup site file for external use
 	siteconfig=${SDK_OUTPUT}/${SDKPATH}/site-config-${TARGET_SYS}
@@ -108,21 +82,21 @@ do_populate_sdk() {
 	# Create environment setup script
 	script=${SDK_OUTPUT}/${SDKPATH}/environment-setup-${TARGET_SYS}
 	touch $script
-	echo 'export PATH=${SDKPATH}/bin:$PATH' >> $script
-	echo 'export PKG_CONFIG_SYSROOT_DIR=${SDKPATH}/${TARGET_SYS}' >> $script
-	echo 'export PKG_CONFIG_PATH=${SDKPATH}/${TARGET_SYS}${libdir}/pkgconfig' >> $script
+	echo 'export PATH=${SDKPATHNATIVE}${bindir_nativesdk}:$PATH' >> $script
+	echo 'export PKG_CONFIG_SYSROOT_DIR=${SDKTARGETSYSROOT}' >> $script
+	echo 'export PKG_CONFIG_PATH=${SDKTARGETSYSROOT}${libdir}/pkgconfig' >> $script
 	echo 'export CONFIG_SITE=${SDKPATH}/site-config-${TARGET_SYS}' >> $script
 	echo 'export CC=${TARGET_PREFIX}gcc' >> $script
 	echo 'export CONFIGURE_FLAGS="--target=${TARGET_SYS} --host=${TARGET_SYS} --build=${SDK_ARCH}-linux"' >> $script
 	if [ "${TARGET_OS}" = "darwin8" ]; then
-		echo 'export TARGET_CFLAGS="-I${SDKPATH}/${TARGET_SYS}${includedir}"' >> $script
-		echo 'export TARGET_LDFLAGS="-L${SDKPATH}/${TARGET_SYS}${libdir}"' >> $script
+		echo 'export TARGET_CFLAGS="-I${SDKTARGETSYSROOT}${includedir}"' >> $script
+		echo 'export TARGET_LDFLAGS="-L${SDKTARGETSYSROOT}${libdir}"' >> $script
 		# Workaround darwin toolchain sysroot path problems
-		cd ${SDK_OUTPUT}${SDKPATH}/${TARGET_SYS}/usr
+		cd ${SDK_OUTPUT}${SDKTARGETSYSROOT}/usr
 		ln -s /usr/local local
 	fi
-	echo "alias opkg='LD_LIBRARY_PATH=${SDKPATH}/lib ${SDKPATH}/bin/opkg-cl -f ${SDKPATH}/${sysconfdir}/opkg-sdk.conf -o ${SDKPATH}'" >> $script
-	echo "alias opkg-target='LD_LIBRARY_PATH=${SDKPATH}/lib ${SDKPATH}/bin/opkg-cl -f ${SDKPATH}/${TARGET_SYS}${sysconfdir}/opkg.conf -o ${SDKPATH}/${TARGET_SYS}'" >> $script
+	echo "alias opkg='LD_LIBRARY_PATH=${SDKPATHNATIVE}${libdir_nativesdk} ${SDKPATHNATIVE}${bindir_nativesdk}/opkg-cl -f ${SDKPATHNATIVE}/${sysconfdir}/opkg-sdk.conf -o ${SDKPATHNATIVE}'" >> $script
+	echo "alias opkg-target='LD_LIBRARY_PATH=${SDKPATHNATIVE}${libdir_nativesdk} ${SDKPATHNATIVE}${bindir_nativesdk}/opkg-cl -f ${SDKTARGETSYSROOT}${sysconfdir}/opkg.conf -o ${SDKTARGETSYSROOT}'" >> $script
 
 	# Add version information
 	versionfile=${SDK_OUTPUT}/${SDKPATH}/version-${TARGET_SYS}
@@ -136,8 +110,6 @@ do_populate_sdk() {
 	mkdir -p ${SDK_DEPLOY}
 	cd ${SDK_OUTPUT}
 	fakeroot tar cfj ${SDK_DEPLOY}/${TOOLCHAIN_OUTPUTNAME}.tar.bz2 .
-	cd ${SDK_OUTPUT2}
-	fakeroot tar cfj ${SDK_DEPLOY}/${TOOLCHAIN_OUTPUTNAME}-extras.tar.bz2 .
 }
 
 do_populate_sdk[nostamp] = "1"