diff --git a/java/idea-ui/src/com/intellij/openapi/roots/ui/configuration/LanguageLevelCombo.java b/java/idea-ui/src/com/intellij/openapi/roots/ui/configuration/LanguageLevelCombo.java
index f277f2c77ba9..11fd46ca6278 100644
--- a/java/idea-ui/src/com/intellij/openapi/roots/ui/configuration/LanguageLevelCombo.java
+++ b/java/idea-ui/src/com/intellij/openapi/roots/ui/configuration/LanguageLevelCombo.java
@@ -25,6 +25,7 @@ import com.intellij.openapi.ui.ComboBox;
 import com.intellij.pom.java.LanguageLevel;
 import com.intellij.ui.ColoredListCellRendererWrapper;
 import com.intellij.ui.SimpleTextAttributes;
+import org.jetbrains.annotations.NotNull;
 
 import javax.swing.*;
 
@@ -58,16 +59,16 @@ public abstract class LanguageLevelCombo extends ComboBox {
     });
   }
 
-  public void reset(Project project) {
+  public void reset(@NotNull Project project) {
     removeAllItems();
     for (LanguageLevel level : LanguageLevel.values()) {
       addItem(level);
     }
     Sdk sdk = ProjectRootManagerEx.getInstanceEx(project).getProjectSdk();
-    sdkUpdated(sdk);
+    sdkUpdated(sdk, project.isDefault());
 
     LanguageLevelProjectExtension extension = LanguageLevelProjectExtension.getInstance(project);
-    if (getDefaultLevel() != null && extension.isDefault()) {
+    if (extension.isDefault()) {
       setSelectedItem(myDefaultItem);
     }
     else {
@@ -77,7 +78,7 @@ public abstract class LanguageLevelCombo extends ComboBox {
 
   protected abstract LanguageLevel getDefaultLevel();
 
-  void sdkUpdated(Sdk sdk) {
+  void sdkUpdated(Sdk sdk, boolean isDefaultProject) {
     LanguageLevel newLevel = null;
     if (sdk != null) {
       JavaSdkVersion version = JavaSdk.getInstance().getVersion(sdk);
@@ -85,11 +86,11 @@ public abstract class LanguageLevelCombo extends ComboBox {
         newLevel = version.getMaxLanguageLevel();
       }
     }
-    updateDefaultLevel(newLevel);
+    updateDefaultLevel(newLevel, isDefaultProject);
   }
 
-  void updateDefaultLevel(LanguageLevel newLevel) {
-    if (newLevel == null) {
+  private void updateDefaultLevel(LanguageLevel newLevel, boolean isDefaultProject) {
+    if (newLevel == null && !isDefaultProject) {
       if (getSelectedItem() == myDefaultItem) {
         setSelectedItem(getDefaultLevel());
       }
diff --git a/java/idea-ui/src/com/intellij/openapi/roots/ui/configuration/ProjectConfigurable.java b/java/idea-ui/src/com/intellij/openapi/roots/ui/configuration/ProjectConfigurable.java
index fc268c7cff5d..3fe44c619516 100644
--- a/java/idea-ui/src/com/intellij/openapi/roots/ui/configuration/ProjectConfigurable.java
+++ b/java/idea-ui/src/com/intellij/openapi/roots/ui/configuration/ProjectConfigurable.java
@@ -173,7 +173,7 @@ public class ProjectConfigurable extends ProjectStructureElementConfigurable<Pro
     myProjectJdkConfigurable.addChangeListener(new ActionListener() {
       @Override
       public void actionPerformed(ActionEvent e) {
-        myLanguageLevelCombo.sdkUpdated(myProjectJdkConfigurable.getSelectedProjectJdk());
+        myLanguageLevelCombo.sdkUpdated(myProjectJdkConfigurable.getSelectedProjectJdk(), myProject.isDefault());
         LanguageLevelProjectExtensionImpl.getInstanceImpl(myProject).setCurrentLevel(myLanguageLevelCombo.getSelectedLevel());
       }
     });
@@ -245,7 +245,10 @@ public class ProjectConfigurable extends ProjectStructureElementConfigurable<Pro
         }
 
         LanguageLevelProjectExtension extension = LanguageLevelProjectExtension.getInstance(myProject);
-        extension.setLanguageLevel(myLanguageLevelCombo.getSelectedLevel());
+        LanguageLevel level = myLanguageLevelCombo.getSelectedLevel();
+        if (level != null) {
+          extension.setLanguageLevel(level);
+        }
         extension.setDefault(myLanguageLevelCombo.isDefault());
         myProjectJdkConfigurable.apply();
 
@@ -295,8 +298,8 @@ public class ProjectConfigurable extends ProjectStructureElementConfigurable<Pro
   @SuppressWarnings({"SimplifiableIfStatement"})
   public boolean isModified() {
     LanguageLevelProjectExtension extension = LanguageLevelProjectExtension.getInstance(myProject);
-    if (!extension.getLanguageLevel().equals(myLanguageLevelCombo.getSelectedLevel()) ||
-         extension.isDefault() != myLanguageLevelCombo.isDefault()) {
+    if (extension.isDefault() != myLanguageLevelCombo.isDefault() ||
+        !extension.isDefault() && !extension.getLanguageLevel().equals(myLanguageLevelCombo.getSelectedLevel())) {
       return true;
     }
     final String compilerOutput = getOriginalCompilerOutputUrl();
diff --git a/java/java-impl/src/com/intellij/openapi/roots/impl/LanguageLevelProjectExtensionImpl.java b/java/java-impl/src/com/intellij/openapi/roots/impl/LanguageLevelProjectExtensionImpl.java
index 55e6d6a56429..946a5b16a7da 100644
--- a/java/java-impl/src/com/intellij/openapi/roots/impl/LanguageLevelProjectExtensionImpl.java
+++ b/java/java-impl/src/com/intellij/openapi/roots/impl/LanguageLevelProjectExtensionImpl.java
@@ -37,7 +37,7 @@ public class LanguageLevelProjectExtensionImpl extends LanguageLevelProjectExten
   private static final String DEFAULT_ATTRIBUTE = "default";
 
   private final Project myProject;
-  private LanguageLevel myLanguageLevel = LanguageLevel.JDK_1_6;
+  private LanguageLevel myLanguageLevel = LanguageLevel.HIGHEST;
   private LanguageLevel myCurrentLevel;
 
   public LanguageLevelProjectExtensionImpl(final Project project) {
@@ -76,7 +76,9 @@ public class LanguageLevelProjectExtensionImpl extends LanguageLevelProjectExten
   }
 
   private void writeExternal(final Element element) {
-    element.setAttribute(LANGUAGE_LEVEL, myLanguageLevel.name());
+    if (myLanguageLevel != null) {
+      element.setAttribute(LANGUAGE_LEVEL, myLanguageLevel.name());
+    }
     Boolean aBoolean = getDefault();
     if (aBoolean != null) {
       element.setAttribute(DEFAULT_ATTRIBUTE, Boolean.toString(aBoolean));
@@ -86,7 +88,7 @@ public class LanguageLevelProjectExtensionImpl extends LanguageLevelProjectExten
 
   private void writeAttributesForIdea7(Element element) {
     final boolean is14 = LanguageLevel.JDK_1_4.equals(myLanguageLevel);
-    final boolean is15 = myLanguageLevel.compareTo(LanguageLevel.JDK_1_5) >= 0;
+    final boolean is15 = myLanguageLevel != null && myLanguageLevel.compareTo(LanguageLevel.JDK_1_5) >= 0;
     element.setAttribute(ASSERT_KEYWORD_ATTR, Boolean.toString(is14 || is15));
     element.setAttribute(JDK_15_ATTR, Boolean.toString(is15));
   }