diff --git a/platform/lang-impl/src/com/intellij/injected/editor/CaretModelWindow.java b/platform/lang-impl/src/com/intellij/injected/editor/CaretModelWindow.java
index 7e11bf4e3554..0ca9958af275 100644
--- a/platform/lang-impl/src/com/intellij/injected/editor/CaretModelWindow.java
+++ b/platform/lang-impl/src/com/intellij/injected/editor/CaretModelWindow.java
@@ -56,9 +56,14 @@ public class CaretModelWindow implements CaretModel {
     myDelegate.moveToLogicalPosition(hostPos);
   }
 
-  public void moveToOffset(final int offset) {
+  @Override
+  public void moveToOffset(int offset) {
+    moveToOffset(offset, false);
+  }
+
+  public void moveToOffset(final int offset, boolean locateBeforeSoftWrap) {
     int hostOffset = myEditorWindow.getDocument().injectedToHost(offset);
-    myDelegate.moveToOffset(hostOffset);
+    myDelegate.moveToOffset(hostOffset, locateBeforeSoftWrap);
   }
 
   public LogicalPosition getLogicalPosition() {
diff --git a/platform/platform-api/src/com/intellij/openapi/editor/CaretModel.java b/platform/platform-api/src/com/intellij/openapi/editor/CaretModel.java
index 0b56a2bad9ff..84c5ad3c2ca3 100644
--- a/platform/platform-api/src/com/intellij/openapi/editor/CaretModel.java
+++ b/platform/platform-api/src/com/intellij/openapi/editor/CaretModel.java
@@ -55,12 +55,23 @@ public interface CaretModel {
   void moveToVisualPosition(VisualPosition pos);
 
   /**
-   * Moves the caret to the specified offset in the document.
+   * Short hand for calling {@link #moveToOffset(int, boolean)} with <code>'false'</code> as a second argument.
    *
-   * @param offset the offset to move to.
+   * @param offset      the offset to move to
    */
   void moveToOffset(int offset);
 
+  /**
+   * Moves the caret to the specified offset in the document.
+   *
+   * @param offset                  the offset to move to.
+   * @param locateBeforeSoftWrap    there is a possible case that there is a soft wrap at the given offset, hence, the same offset
+   *                                corresponds to two different visual positions - just before soft wrap and just after soft wrap.
+   *                                We may want to clearly indicate where to put the caret then. Given parameter allows to do that.
+   *                                <b>Note:</b> it's ignored if there is no soft wrap at the given offset
+   */
+  void moveToOffset(int offset, boolean locateBeforeSoftWrap);
+
   /**
    * Returns the logical position of the caret.
    *
diff --git a/platform/platform-api/src/com/intellij/openapi/editor/EditorModificationUtil.java b/platform/platform-api/src/com/intellij/openapi/editor/EditorModificationUtil.java
index 1371104f5af3..13279c0295c9 100644
--- a/platform/platform-api/src/com/intellij/openapi/editor/EditorModificationUtil.java
+++ b/platform/platform-api/src/com/intellij/openapi/editor/EditorModificationUtil.java
@@ -81,7 +81,7 @@ public class EditorModificationUtil {
   public static int insertStringAtCaret(Editor editor, String s, boolean toProcessOverwriteMode, boolean toMoveCaret) {
     final SelectionModel selectionModel = editor.getSelectionModel();
     if (selectionModel.hasSelection()) {
-      editor.getCaretModel().moveToOffset(selectionModel.getSelectionStart());
+      editor.getCaretModel().moveToOffset(selectionModel.getSelectionStart(), true);
     }
 
     // There is a possible case that particular soft wraps become hard wraps if the caret is located at soft wrap-introduced virtual
@@ -114,7 +114,7 @@ public class EditorModificationUtil {
 
     int offset = oldOffset + s.length();
     if (toMoveCaret){
-      editor.getCaretModel().moveToOffset(offset);
+      editor.getCaretModel().moveToOffset(offset, true);
       editor.getScrollingModel().scrollToCaret(ScrollType.RELATIVE);
       selectionModel.removeSelection();
     }
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/actions/BackspaceAction.java b/platform/platform-impl/src/com/intellij/openapi/editor/actions/BackspaceAction.java
index 24327465e86e..86b8b771ee11 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/actions/BackspaceAction.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/actions/BackspaceAction.java
@@ -81,10 +81,10 @@ public class BackspaceAction extends EditorAction {
       }
       else {
         int offset = editor.getCaretModel().getOffset();
-        editor.getCaretModel().moveToOffset(offset-1);
         editor.getScrollingModel().scrollToCaret(ScrollType.RELATIVE);
         editor.getSelectionModel().removeSelection();
         document.deleteString(offset-1, offset);
+        editor.getCaretModel().moveToOffset(offset - 1, true);
       }
     }
     else if(lineNumber > 0) {
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/actions/DeleteAction.java b/platform/platform-impl/src/com/intellij/openapi/editor/actions/DeleteAction.java
index af8466bd9231..6bfb0a282bed 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/actions/DeleteAction.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/actions/DeleteAction.java
@@ -97,6 +97,7 @@ public class DeleteAction extends EditorAction {
     if(afterLineEnd < 0) {
       int offset = editor.getCaretModel().getOffset();
       document.deleteString(offset, offset + 1);
+      editor.getCaretModel().moveToOffset(offset);
       return;
     }
     if(lineNumber + 1 >= document.getLineCount())
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/impl/CaretModelImpl.java b/platform/platform-impl/src/com/intellij/openapi/editor/impl/CaretModelImpl.java
index 2dc7161ef06e..503ff6715dfd 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/impl/CaretModelImpl.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/impl/CaretModelImpl.java
@@ -35,6 +35,7 @@ import com.intellij.openapi.editor.ex.EditorGutterComponentEx;
 import com.intellij.openapi.editor.ex.PrioritizedDocumentListener;
 import com.intellij.openapi.editor.ex.util.EditorUtil;
 import com.intellij.openapi.editor.impl.event.DocumentEventImpl;
+import com.intellij.openapi.editor.impl.softwrap.SoftWrapHelper;
 import com.intellij.openapi.editor.markup.TextAttributes;
 import com.intellij.openapi.util.text.StringUtil;
 import com.intellij.util.containers.ContainerUtil;
@@ -133,9 +134,13 @@ public class CaretModelImpl implements CaretModel, PrioritizedDocumentListener {
   }
 
   public void moveToOffset(int offset) {
+    moveToOffset(offset, false);
+  }
+
+  public void moveToOffset(int offset, boolean locateBeforeSoftWrap) {
     assertIsDispatchThread();
     validateCallContext();
-    moveToLogicalPosition(myEditor.offsetToLogicalPosition(offset));
+    moveToLogicalPosition(myEditor.offsetToLogicalPosition(offset), locateBeforeSoftWrap);
     if (!myEditor.offsetToLogicalPosition(myOffset).equals(myEditor.offsetToLogicalPosition(offset))) {
       LOG.error("caret moved to wrong offset. Requested:" + offset + " but actual:" + myOffset);
     }
@@ -244,6 +249,10 @@ public class CaretModelImpl implements CaretModel, PrioritizedDocumentListener {
   }
 
   public void moveToLogicalPosition(LogicalPosition pos) {
+    moveToLogicalPosition(pos, false);
+  }
+
+  private void moveToLogicalPosition(LogicalPosition pos, boolean locateBeforeSoftWrap) {
     assertIsDispatchThread();
     validateCallContext();
     int column = pos.column;
@@ -325,6 +334,14 @@ public class CaretModelImpl implements CaretModel, PrioritizedDocumentListener {
     myEditor.updateCaretCursor();
     requestRepaint(oldInfo);
 
+    if (locateBeforeSoftWrap && SoftWrapHelper.isCaretAfterSoftWrap(myEditor)) {
+      int lineToUse = myVisibleCaret.line - 1;
+      if (lineToUse >= 0) {
+        moveToVisualPosition(new VisualPosition(lineToUse, EditorUtil.getLastVisualLineColumnNumber(myEditor, lineToUse)));
+        return;
+      }
+    }
+
     if (!oldCaretPosition.toVisualPosition().equals(myLogicalCaret.toVisualPosition())) {
       CaretEvent event = new CaretEvent(myEditor, oldCaretPosition, myLogicalCaret);
       for (CaretListener listener : myCaretListeners) {
@@ -408,15 +425,19 @@ public class CaretModelImpl implements CaretModel, PrioritizedDocumentListener {
 
     DocumentEventImpl event = (DocumentEventImpl)e;
     final Document document = myEditor.getDocument();
+    boolean performSoftWrapAdjustment = e.getNewLength() > 0 // We want to put caret just after the last added symbol
+      // There is a possible case that the user removes text just before the soft wrap. We want to keep caret
+      // on a visual line with soft wrap start then.
+      || myEditor.getSoftWrapModel().getSoftWrap(e.getOffset()) != null;
 
     if (event.isWholeTextReplaced()) {
       int newLength = document.getTextLength();
       if (myOffset == newLength - e.getNewLength() + e.getOldLength() || newLength == 0) {
-        moveToOffset(newLength);
+        moveToOffset(newLength, performSoftWrapAdjustment);
       }
       else {
         final int line = event.translateLineViaDiff(myLogicalCaret.line);
-        moveToLogicalPosition(new LogicalPosition(line, myLogicalCaret.column));
+        moveToLogicalPosition(new LogicalPosition(line, myLogicalCaret.column), performSoftWrapAdjustment);
       }
     }
     else {
@@ -435,9 +456,8 @@ public class CaretModelImpl implements CaretModel, PrioritizedDocumentListener {
 
       newOffset = Math.min(newOffset, document.getTextLength());
 
-      //TODO:ask max about this code
       // if (newOffset != myOffset) {
-        moveToOffset(newOffset);
+        moveToOffset(newOffset, performSoftWrapAdjustment);
       //}
       //else {
       //  moveToVisualPosition(oldPosition);
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/impl/EditorImpl.java b/platform/platform-impl/src/com/intellij/openapi/editor/impl/EditorImpl.java
index 90778c6723a0..1e07bbfe6381 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/impl/EditorImpl.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/impl/EditorImpl.java
@@ -50,6 +50,7 @@ import com.intellij.openapi.editor.highlighter.HighlighterClient;
 import com.intellij.openapi.editor.impl.event.MarkupModelEvent;
 import com.intellij.openapi.editor.impl.event.MarkupModelListener;
 import com.intellij.openapi.editor.impl.softwrap.SoftWrapDrawingType;
+import com.intellij.openapi.editor.impl.softwrap.SoftWrapHelper;
 import com.intellij.openapi.editor.markup.*;
 import com.intellij.openapi.fileEditor.FileDocumentManager;
 import com.intellij.openapi.progress.ProgressManager;
@@ -294,6 +295,7 @@ public final class EditorImpl extends UserDataHolderBase implements EditorEx, Hi
     myDocument.addDocumentListener(myCaretModel);
     myDocument.addDocumentListener(mySelectionModel);
     myDocument.addDocumentListener(myEditorDocumentAdapter);
+    myDocument.addDocumentListener(mySoftWrapModel);
 
     myIndentsModel = new IndentsModelImpl(this);
     myCaretModel.addCaretListener(new CaretListener() {
@@ -522,6 +524,7 @@ public final class EditorImpl extends UserDataHolderBase implements EditorEx, Hi
     myDocument.removeDocumentListener(myFoldingModel);
     myDocument.removeDocumentListener(myCaretModel);
     myDocument.removeDocumentListener(mySelectionModel);
+    myDocument.removeDocumentListener(mySoftWrapModel);
 
     MarkupModelEx markupModel = (MarkupModelEx)myDocument.getMarkupModel(myProject, false);
     if (markupModel instanceof MarkupModelImpl) {
@@ -1126,7 +1129,7 @@ public final class EditorImpl extends UserDataHolderBase implements EditorEx, Hi
       }
       // We need to consider 'before soft wrap drawing'.
       TextChange softWrap = getSoftWrapModel().getSoftWrap(offset);
-      if (softWrap != null) {
+      if (softWrap != null && offset > startOffset) {
         column++;
         x += getSoftWrapModel().getMinDrawingWidthInPixels(SoftWrapDrawingType.BEFORE_SOFT_WRAP_LINE_FEED);
         if (column >= length) {
@@ -1585,6 +1588,7 @@ public final class EditorImpl extends UserDataHolderBase implements EditorEx, Hi
 
   @SuppressWarnings({"StatementWithEmptyBody"})
   private void paintBackgrounds(Graphics g, Rectangle clip) {
+    boolean locateBeforeSoftWrap = !SoftWrapHelper.isCaretAfterSoftWrap(this);
     Color defaultBackground = getBackgroundColor();
     g.setColor(defaultBackground);
     g.fillRect(clip.x, clip.y, clip.width, clip.height);
@@ -1702,6 +1706,22 @@ public final class EditorImpl extends UserDataHolderBase implements EditorEx, Hi
     if (lIterator.getLineNumber() >= lastLineIndex && position.y <= clip.y + clip.height) {
       paintAfterFileEndBackground(iterationState, g, position, clip, lineHeight, defaultBackground);
     }
+
+    // Perform additional activity if soft wrap is added or removed during repainting.
+    if (mySoftWrapsChanged) {
+      mySoftWrapsChanged = false;
+      validateSize();
+
+      // Repaint editor to the bottom in order to ensure that its content is shown correctly after new soft wrap introduction.
+      repaintToScreenBottom(xyToLogicalPosition(position).line);
+
+      // Repaint gutter at all space that is located after active clip in order to ensure that line numbers are correctly redrawn
+      // in accordance with the newly introduced soft wrap(s).
+      myGutterComponent.repaint(0, clip.y, myGutterComponent.getWidth(), myGutterComponent.getHeight() - clip.y);
+
+      // Ask caret model to update visual caret position.
+      getCaretModel().moveToOffset(getCaretModel().getOffset(), locateBeforeSoftWrap);
+    }
   }
 
   private void paintRectangularSelection(Graphics g) {
@@ -1756,7 +1776,7 @@ public final class EditorImpl extends UserDataHolderBase implements EditorEx, Hi
       if (startToUse < softWrapStart) {
         position.x = drawBackground(g, backColor, text.subSequence(startToUse, softWrapStart), position, fontType, defaultBackground, clip);
       }
-      drawSoftWrap(g, backColor, softWrap, position, fontType, defaultBackground, clip);
+      drawSoftWrap(g, softWrap, position, fontType, defaultBackground, clip);
       startToUse = softWrapStart;
     }
 
@@ -1766,37 +1786,61 @@ public final class EditorImpl extends UserDataHolderBase implements EditorEx, Hi
     return position.x;
   }
 
-  private void drawSoftWrap(Graphics g, Color backColor, TextChange softWrap, Point position,
-                            int fontType, Color defaultBackground, Rectangle clip)
-  {
-    position.x = drawBackground(
-      g, backColor, getSoftWrapModel().getMinDrawingWidthInPixels(SoftWrapDrawingType.BEFORE_SOFT_WRAP_LINE_FEED), position,
-      defaultBackground, clip
-    );
+  private void drawSoftWrap(Graphics g, TextChange softWrap, Point position, int fontType, Color defaultBackground, Rectangle clip) {
+    // The main idea is to to do the following:
+    //     *) update given drawing position coordinates in accordance with the current soft wrap;
+    //     *) draw 'active line' background at soft wrap-introduced virtual space if necessary;
 
     CharSequence softWrapText = softWrap.getText();
-    int start = 0;
-    for (
-      int end = CharArrayUtil.shiftForwardUntil(softWrapText, start, "\n");
-      start < softWrapText.length() && end < softWrapText.length();
-      end = CharArrayUtil.shiftForwardUntil(softWrapText, start, "\n"))
-    {
-      drawBackground(g, backColor, softWrapText.subSequence(start, end), position, fontType, defaultBackground, clip);
-      start = end + 1;
-      position.x = 0;
-      position.y += getLineHeight();
+    int activeRowY = getCaretModel().getVisualPosition().line * getLineHeight();
+    if (position.y == activeRowY) {
+      // Draw 'active line' background after soft wrap.
+      Color caretRowColor = getColorsScheme().getColor(EditorColors.CARET_ROW_COLOR);
+      drawBackground(g, caretRowColor, clip.x + clip.width - position.x, position, defaultBackground, clip);
     }
 
-    if (start < softWrapText.length()) {
-      position.x = drawBackground(
-        g, backColor, softWrapText.subSequence(start, softWrapText.length()), position, fontType, defaultBackground, clip
-      );
+    int i = CharArrayUtil.lastIndexOf(softWrapText, "\n", softWrapText.length()) + 1;
+    position.x = getTextSegmentWidth(softWrapText.subSequence(i, softWrapText.length()), 0, fontType, clip);
+    position.x += getSoftWrapModel().getMinDrawingWidthInPixels(SoftWrapDrawingType.AFTER_SOFT_WRAP);
+    position.y += getLineHeight();
+
+    if (position.y == activeRowY) {
+      // Draw 'active line' background for the soft wrap-introduced virtual space.
+      Color caretRowColor = getColorsScheme().getColor(EditorColors.CARET_ROW_COLOR);
+      drawBackground(g, caretRowColor, position.x, new Point(0, activeRowY), defaultBackground, clip);
     }
 
-    position.x = drawBackground(
-      g, backColor, getSoftWrapModel().getMinDrawingWidthInPixels(SoftWrapDrawingType.AFTER_SOFT_WRAP), position,
-      defaultBackground, clip
-    );
+    // The code below draws background for soft wrap-introduced virtual space. It's is considered that we don't want
+    // to do that for now. Uncomment if that decision is changed.
+
+    //position.x = drawBackground(
+    //  g, backColor, getSoftWrapModel().getMinDrawingWidthInPixels(SoftWrapDrawingType.BEFORE_SOFT_WRAP_LINE_FEED), position,
+    //  defaultBackground, clip
+    //);
+    //
+    //CharSequence softWrapText = softWrap.getText();
+    //int start = 0;
+    //for (
+    //  int end = CharArrayUtil.shiftForwardUntil(softWrapText, start, "\n");
+    //  start < softWrapText.length() && end < softWrapText.length();
+    //  end = CharArrayUtil.shiftForwardUntil(softWrapText, start, "\n"))
+    //{
+    //  drawBackground(g, backColor, softWrapText.subSequence(start, end), position, fontType, defaultBackground, clip);
+    //  start = end + 1;
+    //  position.x = 0;
+    //  position.y += getLineHeight();
+    //}
+    //
+    //if (start < softWrapText.length()) {
+    //  position.x = drawBackground(
+    //    g, backColor, softWrapText.subSequence(start, softWrapText.length()), position, fontType, defaultBackground, clip
+    //  );
+    //}
+    //
+    //position.x = drawBackground(
+    //  g, backColor, getSoftWrapModel().getMinDrawingWidthInPixels(SoftWrapDrawingType.AFTER_SOFT_WRAP), position,
+    //  defaultBackground, clip
+    //);
   }
 
   private int drawBackground(Graphics g, Color backColor, CharSequence text, Point position, int fontType, Color defaultBackground,
@@ -1861,7 +1905,7 @@ public final class EditorImpl extends UserDataHolderBase implements EditorEx, Hi
 
     // We use AtomicReference here just as a holder for LogicalPosition
     // The main idea is that there is a possible case that we need to perform painting starting from soft-wrapped logical line.
-    // We may want to skip necessary of visual lines then. Hence, we remember logical position that corresponds to the starting
+    // We may want to skip necessary number of visual lines then. Hence, we remember logical position that corresponds to the starting
     // visual line in order to use it for further processing. As soon as necessary number of visual lines is skipped, logical
     // position is expected to be set to null as an indication that no soft wrap-introduced visual lines should be skipped on
     // current painting iteration.
@@ -1975,22 +2019,6 @@ public final class EditorImpl extends UserDataHolderBase implements EditorEx, Hi
     }
 
     flushCachedChars(g);
-
-    // Perform additional activity if soft wrap is added or removed during repainting.
-    if (mySoftWrapsChanged) {
-      mySoftWrapsChanged = false;
-      validateSize();
-
-      // Repaint editor to the bottom in order to ensure that its content is shown correctly after new soft wrap introduction.
-      repaintToScreenBottom(xyToLogicalPosition(position).line);
-
-      // Repaint gutter at all space that is located after active clip in order to ensure that line numbers are correctly redrawn
-      // in accordance with the newly introduced soft wrap(s).
-      myGutterComponent.repaint(0, clip.y, myGutterComponent.getWidth(), myGutterComponent.getHeight() - clip.y);
-
-      // Ask caret model to update visual caret position.
-      getCaretModel().moveToOffset(getCaretModel().getOffset());
-    }
   }
 
   private boolean paintSelection() {
@@ -3536,7 +3564,7 @@ public final class EditorImpl extends UserDataHolderBase implements EditorEx, Hi
       super(orientation);
     }
 
-    void setPersistendUI(ScrollBarUI ui) {
+    void setPersistentUI(ScrollBarUI ui) {
       myPersistentUI = ui;
       setUI(ui);
     }
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/impl/EditorMarkupModelImpl.java b/platform/platform-impl/src/com/intellij/openapi/editor/impl/EditorMarkupModelImpl.java
index 405de6210f6f..0bacaf8c4731 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/impl/EditorMarkupModelImpl.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/impl/EditorMarkupModelImpl.java
@@ -463,10 +463,10 @@ public class EditorMarkupModelImpl extends MarkupModelImpl implements EditorMark
 
   public void setErrorStripeVisible(boolean val) {
     if (val) {
-      myEditor.getVerticalScrollBar().setPersistendUI(new MyErrorPanel());
+      myEditor.getVerticalScrollBar().setPersistentUI(new MyErrorPanel());
     }
     else {
-      myEditor.getVerticalScrollBar().setPersistendUI(ButtonlessScrollBarUI.createNormal());
+      myEditor.getVerticalScrollBar().setPersistentUI(ButtonlessScrollBarUI.createNormal());
     }
   }
 
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/impl/SoftWrapModelImpl.java b/platform/platform-impl/src/com/intellij/openapi/editor/impl/SoftWrapModelImpl.java
index c1283a0b4a02..1c8967076f5f 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/impl/SoftWrapModelImpl.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/impl/SoftWrapModelImpl.java
@@ -16,6 +16,8 @@
 package com.intellij.openapi.editor.impl;
 
 import com.intellij.openapi.editor.*;
+import com.intellij.openapi.editor.event.DocumentEvent;
+import com.intellij.openapi.editor.event.DocumentListener;
 import com.intellij.openapi.editor.ex.EditorEx;
 import com.intellij.openapi.editor.ex.SoftWrapChangeListener;
 import com.intellij.openapi.editor.ex.SoftWrapModelEx;
@@ -27,6 +29,7 @@ import org.jetbrains.annotations.NotNull;
 import org.jetbrains.annotations.Nullable;
 
 import java.awt.*;
+import java.util.ArrayList;
 import java.util.Collections;
 import java.util.List;
 
@@ -41,7 +44,9 @@ import java.util.List;
  * @author Denis Zhdanov
  * @since Jun 8, 2010 12:47:32 PM
  */
-public class SoftWrapModelImpl implements SoftWrapModelEx {
+public class SoftWrapModelImpl implements SoftWrapModelEx, DocumentListener {
+
+  private final List<DocumentListener> myDocumentListeners = new ArrayList<DocumentListener>();
 
   private final SoftWrapDataMapper            myDataMapper;
   private final SoftWrapsStorage              myStorage;
@@ -69,6 +74,14 @@ public class SoftWrapModelImpl implements SoftWrapModelEx {
     );
   }
 
+  public SoftWrapModelImpl(@NotNull EditorEx editor, @NotNull SoftWrapsStorage storage, @NotNull SoftWrapPainter painter,
+                           @NotNull DefaultSoftWrapApplianceManager applianceManager, @NotNull SoftWrapDataMapper dataMapper,
+                           @NotNull SoftWrapDocumentChangeManager documentChangeManager)
+  {
+    this(editor, storage, painter, (SoftWrapApplianceManager)applianceManager, dataMapper, documentChangeManager);
+    myDocumentListeners.add(applianceManager.getDocumentListener());
+  }
+
   public SoftWrapModelImpl(@NotNull EditorEx editor, @NotNull SoftWrapsStorage storage, @NotNull SoftWrapPainter painter,
                            @NotNull SoftWrapApplianceManager applianceManager, @NotNull SoftWrapDataMapper dataMapper,
                            @NotNull SoftWrapDocumentChangeManager documentChangeManager)
@@ -79,6 +92,8 @@ public class SoftWrapModelImpl implements SoftWrapModelEx {
     myApplianceManager = applianceManager;
     myDataMapper = dataMapper;
     myDocumentChangeManager = documentChangeManager;
+
+    myDocumentListeners.add(myDocumentChangeManager);
   }
 
   public boolean isSoftWrappingEnabled() {
@@ -349,26 +364,35 @@ public class SoftWrapModelImpl implements SoftWrapModelEx {
     return result;
   }
 
+  @Override
   public void beforeDocumentChangeAtCaret() {
     CaretModel caretModel = myEditor.getCaretModel();
     VisualPosition visualCaretPosition = caretModel.getVisualPosition();
     if (!isInsideSoftWrap(visualCaretPosition)) {
       return;
     }
-    int offset = caretModel.getOffset();
-    TextChangeImpl softWrap = myStorage.getSoftWrap(offset);
-    if (softWrap == null) {
-      return;
+    if (myDocumentChangeManager.makeHardWrap(caretModel.getOffset())) {
+      // Restore caret position.
+      caretModel.moveToVisualPosition(visualCaretPosition);
     }
-
-    myDocumentChangeManager.makeHardWrap(softWrap);
-
-    // Restore caret position.
-    caretModel.moveToVisualPosition(visualCaretPosition);
   }
 
   @Override
   public boolean addSoftWrapChangeListener(@NotNull SoftWrapChangeListener listener) {
     return myStorage.addSoftWrapChangeListener(listener);
   }
+
+  @Override
+  public void beforeDocumentChange(DocumentEvent event) {
+    for (DocumentListener listener : myDocumentListeners) {
+      listener.beforeDocumentChange(event);
+    }
+  }
+
+  @Override
+  public void documentChanged(DocumentEvent event) {
+    for (DocumentListener listener : myDocumentListeners) {
+      listener.documentChanged(event);
+    }
+  }
 }
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/CompositeSoftWrapPainter.java b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/CompositeSoftWrapPainter.java
index b5eef3985a10..57d9ba6c69bc 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/CompositeSoftWrapPainter.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/CompositeSoftWrapPainter.java
@@ -45,10 +45,10 @@ import static java.util.Arrays.asList;
 public class CompositeSoftWrapPainter implements SoftWrapPainter {
 
   private static final List<Map<SoftWrapDrawingType, Character>> SYMBOLS = asList(
-    asMap(asList(BEFORE_SOFT_WRAP_LINE_FEED, AFTER_SOFT_WRAP),
-          asList('\uE48B',                   '\uE48C')),
     asMap(asList(BEFORE_SOFT_WRAP_LINE_FEED, AFTER_SOFT_WRAP),
           asList('\u2926',                   '\u2925')),
+    asMap(asList(BEFORE_SOFT_WRAP_LINE_FEED, AFTER_SOFT_WRAP),
+          asList('\uE48B',                   '\uE48C')),
     asMap(asList(BEFORE_SOFT_WRAP_LINE_FEED, AFTER_SOFT_WRAP),
           asList('\u21B2',                   '\u21B3')),
     asMap(asList(BEFORE_SOFT_WRAP_LINE_FEED, AFTER_SOFT_WRAP),
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/DefaultSoftWrapApplianceManager.java b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/DefaultSoftWrapApplianceManager.java
index d3583b094aa7..5ba742fd8b46 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/DefaultSoftWrapApplianceManager.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/DefaultSoftWrapApplianceManager.java
@@ -18,6 +18,7 @@ package com.intellij.openapi.editor.impl.softwrap;
 import com.intellij.openapi.editor.Document;
 import com.intellij.openapi.editor.VisualPosition;
 import com.intellij.openapi.editor.actions.EditorActionUtil;
+import com.intellij.openapi.editor.event.DocumentListener;
 import com.intellij.openapi.editor.ex.EditorEx;
 import com.intellij.openapi.editor.ex.util.EditorUtil;
 import com.intellij.openapi.editor.impl.EditorTextRepresentationHelper;
@@ -58,7 +59,6 @@ import java.nio.CharBuffer;
  */
 public class DefaultSoftWrapApplianceManager implements SoftWrapApplianceManager {
 
-
   /** Enumerates possible type of soft wrap indents to use. */
   enum IndentType {
     /** Don't apply special indent to soft-wrapped line at all. */
@@ -103,6 +103,18 @@ public class DefaultSoftWrapApplianceManager implements SoftWrapApplianceManager
   }
 
   private final TIntHashSet myProcessedLogicalLines = new TIntHashSet();
+  private final DocumentListener myDocumentListener = new LineOrientedDocumentChangeAdapter() {
+    @Override
+    public void beforeDocumentChange(int startLine, int endLine, int symbolsDifference) {
+      for (int i = startLine; i <= endLine; i++) {
+        myProcessedLogicalLines.remove(i);
+      }
+    }
+
+    @Override
+    public void afterDocumentChange(int startLine, int endLine, int symbolsDifference) {
+    }
+  };
 
   private final EditorTextRepresentationHelper myTextRepresentationHelper;
   private final SoftWrapsStorage               myStorage;
@@ -120,7 +132,6 @@ public class DefaultSoftWrapApplianceManager implements SoftWrapApplianceManager
     myEditor = editor;
     myPainter = painter;
     myTextRepresentationHelper = textRepresentationHelper;
-    init(editor.getDocument());
   }
 
   @SuppressWarnings({"AssignmentToForLoopParameter"})
@@ -147,19 +158,8 @@ public class DefaultSoftWrapApplianceManager implements SoftWrapApplianceManager
     }
   }
 
-  private void init(final Document document) {
-    document.addDocumentListener(new LineOrientedDocumentChangeAdapter() {
-      @Override
-      public void beforeDocumentChange(int startLine, int endLine, int symbolsDifference) {
-        for (int i = startLine; i <= endLine; i++) {
-          myProcessedLogicalLines.remove(i);
-        }
-      }
-
-      @Override
-      public void afterDocumentChange(int startLine, int endLine, int symbolsDifference) {
-      }
-    });
+  public DocumentListener getDocumentListener() {
+    return myDocumentListener;
   }
 
   private void dropDataIfNecessary() {
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/SoftWrapDocumentChangeManager.java b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/SoftWrapDocumentChangeManager.java
index ac32e135de49..4ca0cf4f654f 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/SoftWrapDocumentChangeManager.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/SoftWrapDocumentChangeManager.java
@@ -17,11 +17,12 @@ package com.intellij.openapi.editor.impl.softwrap;
 
 import com.intellij.openapi.editor.Document;
 import com.intellij.openapi.editor.Editor;
+import com.intellij.openapi.editor.event.DocumentEvent;
+import com.intellij.openapi.editor.event.DocumentListener;
 import gnu.trove.TIntHashSet;
 import gnu.trove.TIntProcedure;
 import org.jetbrains.annotations.NotNull;
 
-import java.util.ArrayList;
 import java.util.List;
 
 /**
@@ -30,9 +31,9 @@ import java.util.List;
  * @author Denis Zhdanov
  * @since Jul 7, 2010 2:28:10 PM
  */
-public class SoftWrapDocumentChangeManager {
+public class SoftWrapDocumentChangeManager implements DocumentListener {
 
-  private final List<DeferredChange> myDeferredChanges = new ArrayList<DeferredChange>();
+  private final TIntHashSet mySoftWrapsToRemoveIndices = new TIntHashSet();
 
   private final SoftWrapsStorage myStorage;
   private final Editor           myEditor;
@@ -40,16 +41,23 @@ public class SoftWrapDocumentChangeManager {
   public SoftWrapDocumentChangeManager(@NotNull Editor editor, @NotNull SoftWrapsStorage storage) {
     myStorage = storage;
     myEditor = editor;
-    init(editor.getDocument());
   }
 
   /**
-   * Performs {@code 'soft wrap' -> 'hard wrap'} conversion for the given soft wrap.
+   * Performs {@code 'soft wrap' -> 'hard wrap'} conversion for soft wrap at the given offset if any.
    *
-   * @param softWrap    soft wrap to make hard wrap
+   * @param offset    offset that may point to soft wrap to make hard wrap
+   * @return          <code>true</code> if given offset points to soft wrap that was made hard wrap; <code>false</code> otherwise
    */
-  public void makeHardWrap(@NotNull TextChangeImpl softWrap) {
+  public boolean makeHardWrap(int offset) {
+    TextChangeImpl softWrap = myStorage.getSoftWrap(offset);
+    if (softWrap == null) {
+      return false;
+    }
+
+    myStorage.removeByIndex(myStorage.getSoftWrapIndex(offset));
     myEditor.getDocument().replaceString(softWrap.getStart(), softWrap.getEnd(), softWrap.getText());
+    return true;
   }
 
   /**
@@ -59,74 +67,63 @@ public class SoftWrapDocumentChangeManager {
    * until this method is called.
    */
   public void syncSoftWraps() {
-    Document document = myEditor.getDocument();
-
-    TIntHashSet softWrapsToRemoveIndices = new TIntHashSet();
-
-    // Update offsets for soft wraps that remain after the changed line(s).
-    List<TextChangeImpl> softWraps = myStorage.getSoftWraps();
-    for (DeferredChange change : myDeferredChanges) {
-      if (change.startOffset >= document.getTextLength()) {
-        continue;
-      }
-      int index = myStorage.getSoftWrapIndex(change.startOffset);
-      if (index < 0) {
-        index = -index -1;
-      }
-      for (int i = index; i < softWraps.size(); i++) {
-        TextChangeImpl softWrap = softWraps.get(i);
-        if (softWrapsToRemoveIndices.contains(i)) {
-          continue;
-        }
-        if (softWrap.getStart() < change.endOffset || softWrap.getStart() >= document.getTextLength()) {
-          softWrapsToRemoveIndices.add(i);
-          continue;
-        }
-        softWrap.advance(change.symbolsDifference);
-      }
-    }
-
-    // Removes soft wraps from changed lines.
-    softWrapsToRemoveIndices.forEach(new TIntProcedure() {
+    mySoftWrapsToRemoveIndices.forEach(new TIntProcedure() {
       @Override
       public boolean execute(int value) {
         myStorage.removeByIndex(value);
         return true;
       }
     });
-
-    myDeferredChanges.clear();
+    mySoftWrapsToRemoveIndices.clear();
   }
 
-  private void init(final Document document) {
-    document.addDocumentListener(new LineOrientedDocumentChangeAdapter() {
-      @Override
-      public void beforeDocumentChange(int startLine, int endLine, int symbolsDifference) {
-        myDeferredChanges.add(
-          new DeferredChange(document.getLineStartOffset(startLine), document.getLineEndOffset(endLine), symbolsDifference)
-        );
-      }
+  @Override
+  public void beforeDocumentChange(DocumentEvent event) {
+    // Mark soft wraps to be removed.
+    Document document = myEditor.getDocument();
+    int startLine = document.getLineNumber(event.getOffset());
+    int startOffset = document.getLineStartOffset(startLine);
+    int endLine = document.getLineNumber(event.getOffset() + event.getOldLength());
+    int endOffset = document.getLineEndOffset(endLine);
+    markSoftWrapsForDeletion(startOffset, endOffset);
 
-      @Override
-      public void afterDocumentChange(int startLine, int endLine, int symbolsDifference) {
-      }
-    });
+    // Update offsets for soft wraps that remain after the changed line(s).
+    applyDocumentChangeDiff(event);
   }
 
-  private static class DeferredChange {
-    final int startOffset;
-    final int endOffset;
-    final int symbolsDifference;
+  @Override
+  public void documentChanged(DocumentEvent event) {
+  }
 
-    DeferredChange(int startOffset, int endOffset, int symbolsDifference) {
-      this.startOffset = startOffset;
-      this.endOffset = endOffset;
-      this.symbolsDifference = symbolsDifference;
+  private void markSoftWrapsForDeletion(int startOffset, int endOffset) {
+    List<TextChangeImpl> softWraps = myStorage.getSoftWraps();
+    int index = myStorage.getSoftWrapIndex(startOffset);
+    if (index < 0) {
+      index = -index - 1;
+    }
+    for (int i = index; i < softWraps.size(); i++) {
+      TextChangeImpl softWrap = softWraps.get(i);
+      if (softWrap.getStart() >= endOffset) {
+        break;
+      }
+      mySoftWrapsToRemoveIndices.add(i);
+    }
+  }
+
+  private void applyDocumentChangeDiff(DocumentEvent event) {
+    List<TextChangeImpl> softWraps = myStorage.getSoftWraps();
+    
+    // We use 'offset + 1' here because soft wrap is represented before the document symbol at the same offset, hence, document
+    // modification at particular offset doesn't affect soft wrap registered for the same offset.
+    int index = myStorage.getSoftWrapIndex(event.getOffset() + 1);
+    if (index < 0) {
+      index = -index - 1;
     }
 
-    @Override
-    public String toString() {
-      return startOffset + "-" + endOffset + ": " + symbolsDifference;
+    int diff = event.getNewLength() - event.getOldLength();
+    for (int i = index; i < softWraps.size(); i++) {
+      TextChangeImpl softWrap = softWraps.get(i);
+      softWrap.advance(diff);
     }
   }
 }
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/SoftWrapHelper.java b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/SoftWrapHelper.java
new file mode 100644
index 000000000000..f213fac8ac36
--- /dev/null
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/SoftWrapHelper.java
@@ -0,0 +1,91 @@
+/*
+ * Copyright 2000-2010 JetBrains s.r.o.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+package com.intellij.openapi.editor.impl.softwrap;
+
+import com.intellij.openapi.editor.CaretModel;
+import com.intellij.openapi.editor.Editor;
+import com.intellij.openapi.editor.SoftWrapModel;
+import com.intellij.openapi.editor.TextChange;
+
+/**
+ * Holds utility methods for soft wraps-related processing.
+ *
+ * @author Denis Zhdanov
+ * @since Aug 11, 2010 11:03:43 AM
+ */
+public class SoftWrapHelper {
+
+  private SoftWrapHelper() {
+  }
+
+  /**
+   * Every soft wrap implies that multiple visual positions correspond to the same document offset. We can classify
+   * such positions by the following criteria:
+   * <pre>
+   * <ul>
+   *   <li>positions from visual line with soft wrap start;</li>
+   *   <li>positions from visual line with soft wrap end;</li>
+   * </ul>
+   * </pre>
+   * <p/>
+   * This method allows to answer if caret offset of the given editor points to soft wrap and visual caret position
+   * belongs to the visual line where soft wrap start is located.
+   *
+   * @param editor    target editor
+   * @return          <code>true</code> if caret offset of the given editor points to visual position that belongs to
+   *                  visual line before the soft wrap
+   */
+  public static boolean isCaretBeforeSoftWrap(Editor editor) {
+    CaretModel caretModel = editor.getCaretModel();
+    SoftWrapModel softWrapModel = editor.getSoftWrapModel();
+    int offset = caretModel.getOffset();
+    TextChange softWrap = softWrapModel.getSoftWrap(offset);
+    if (softWrap == null) {
+      return false;
+    }
+
+    return editor.offsetToVisualPosition(offset).line != caretModel.getVisualPosition().line;
+  }
+
+  /**
+   * Every soft wrap implies that multiple visual positions correspond to the same document offset. We can classify
+   * such positions by the following criteria:
+   * <pre>
+   * <ul>
+   *   <li>positions from visual line with soft wrap start;</li>
+   *   <li>positions from visual line with soft wrap end;</li>
+   * </ul>
+   * </pre>
+   * <p/>
+   * This method allows to answer if caret offset of the given editor points to soft wrap and visual caret position
+   * belongs to the visual line where soft wrap end is located.
+   *
+   * @param editor    target editor
+   * @return          <code>true</code> if caret offset of the given editor points to visual position that belongs to
+   *                  visual line where soft wrap end is located
+   */
+  public static boolean isCaretAfterSoftWrap(Editor editor) {
+    CaretModel caretModel = editor.getCaretModel();
+    SoftWrapModel softWrapModel = editor.getSoftWrapModel();
+    int offset = caretModel.getOffset();
+    TextChange softWrap = softWrapModel.getSoftWrap(offset);
+    if (softWrap == null) {
+      return false;
+    }
+
+    return editor.offsetToVisualPosition(offset).line == caretModel.getVisualPosition().line;
+  }
+}
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/TextChangeImpl.java b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/TextChangeImpl.java
index d2f62f48c029..0a676dcb94f4 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/TextChangeImpl.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/TextChangeImpl.java
@@ -134,8 +134,7 @@ public class TextChangeImpl implements TextChange {
   }
 
   /**
-   * Creates new {@link TextChange} on the basis of the current object with given offset applied to its {@link #getStart() start}
-   * and {@link #getEnd() end} properties.
+   * Applies given offset applied to the {@link #getStart() start} and {@link #getEnd() end} properties of current text change object.
    *
    * @param offset    offset to apply to the current change object
    * @return          text change that is built on the basis of the current object that with {@link #getStart() start}
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/textarea/TextComponentCaretModel.java b/platform/platform-impl/src/com/intellij/openapi/editor/textarea/TextComponentCaretModel.java
index 0e133324936d..79439578f2ad 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/textarea/TextComponentCaretModel.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/textarea/TextComponentCaretModel.java
@@ -44,14 +44,19 @@ public class TextComponentCaretModel implements CaretModel {
   }
 
   public void moveToLogicalPosition(final LogicalPosition pos) {
-    moveToOffset(myEditor.logicalPositionToOffset(pos));
+    moveToOffset(myEditor.logicalPositionToOffset(pos), false);
   }
 
   public void moveToVisualPosition(final VisualPosition pos) {
     moveToLogicalPosition(myEditor.visualToLogicalPosition(pos));
   }
 
-  public void moveToOffset(final int offset) {
+  @Override
+  public void moveToOffset(int offset) {
+    moveToOffset(offset, false);
+  }
+
+  public void moveToOffset(final int offset, boolean locateBeforeSoftWrap) {
     myTextComponent.setCaretPosition(Math.min(offset, myTextComponent.getText().length()));
   }