--- ediff-ptch.el	2007-02-25 18:10:42.000000000 +0100
+++ ediff-ptch.el	2007-02-25 18:11:11.000000000 +0100
@@ -311,22 +311,23 @@
                          (file-exists-p base-dir1))
                 (message "(file-exists-p base-dir2) %s"
                          (file-exists-p base-dir2))
 		;; If both base-dir1 and base-dir2 are relative and exist,
 		;; assume that
 		;; these dirs lead to the actual files starting at the present
 		;; directory. So, we don't strip these relative dirs from the
 		;; file names. This is a heuristic intended to improve guessing
-		(unless (or (file-name-absolute-p base-dir1)
-			    (file-name-absolute-p base-dir2)
-			    (not (file-exists-p base-dir1))
-			    (not (file-exists-p base-dir2)))
+                (let ((default-directory (file-name-directory filename)))
+                  (unless (or (file-name-absolute-p base-dir1)
+                              (file-name-absolute-p base-dir2)
+                              (not (file-exists-p base-dir1))
+                              (not (file-exists-p base-dir2)))
 		  (setq base-dir1 ""
-			base-dir2 ""))
+			base-dir2 "")))
 		(or (string= (car proposed-file-names) "/dev/null")
 		    (setcar proposed-file-names
 			    (ediff-file-name-sans-prefix
 			     (car proposed-file-names) base-dir1)))
 		(or (string=
 		     (cdr proposed-file-names) "/dev/null")
 		    (setcdr proposed-file-names
 			    (ediff-file-name-sans-prefix