diff -ur org/include/curl/curl.h neu/include/curl/curl.h
--- org/include/curl/curl.h	2006-10-21 14:32:08.000000000 +0200
+++ neu/include/curl/curl.h	2006-11-02 21:56:05.427222400 +0100
@@ -392,6 +392,10 @@
                                     CURLOPT_CONV_FROM_UTF8_FUNCTION */
   CURLE_SSL_CACERT_BADFILE,      /* 77 - could not load CACERT file, missing
                                     or wrong format */
+  CURLE_SERVER_CLOSED_CONNECTION,/* 78 - On HTTP-Proxy connection, the server
+                                    closed the connection while doing the
+                                    Authentication dialog. Reconnect with 
+                                    new Authentication information */
   CURL_LAST /* never use! */
 } CURLcode;
 
diff -ur org/lib/http.c neu/lib/http.c
--- org/lib/http.c	2006-10-18 00:32:56.000000000 +0200
+++ neu/lib/http.c	2006-11-02 22:34:01.279737600 +0100
@@ -1110,6 +1110,7 @@
   curl_socket_t tunnelsocket = conn->sock[sockindex];
   send_buffer *req_buffer;
   curl_off_t cl=0;
+  int closeConnection = FALSE;
 
 #define SELECT_OK      0
 #define SELECT_ERROR   1
@@ -1310,6 +1311,10 @@
                 cl = curlx_strtoofft(line_start + strlen("Content-Length:"),
                                      NULL, 10);
               }
+              else if(checkprefix("Connection:", line_start)) {
+                if (strstr(line_start + strlen("Connection:"), "close") != NULL)
+                  closeConnection = TRUE;
+              }
               else if(2 == sscanf(line_start, "HTTP/1.%d %d",
                                   &subversion,
                                   &k->httpcode)) {
@@ -1336,12 +1341,21 @@
          headers. 'newurl' is set to a new URL if we must loop. */
       Curl_http_auth_act(conn);
 
+    if (closeConnection && data->reqdata.newurl) {
+      /* Connection closed by server. Don't use it anymore */
+      sclose(conn->sock[sockindex]);
+      conn->sock[sockindex] = CURL_SOCKET_BAD;
+      break;
+    }
   } while(data->reqdata.newurl);
 
   if(200 != k->httpcode) {
     failf(data, "Received HTTP code %d from proxy after CONNECT",
           k->httpcode);
-    return CURLE_RECV_ERROR;
+    if (closeConnection && data->reqdata.newurl)
+      return CURLE_SERVER_CLOSED_CONNECTION;
+    else
+      return CURLE_RECV_ERROR;
   }
 
   /* If a proxy-authorization header was used for the proxy, then we should
diff -ur org/lib/url.c neu/lib/url.c
--- org/lib/url.c	2006-10-29 23:46:28.000000000 +0100
+++ neu/lib/url.c	2006-11-02 22:11:31.769236800 +0100
@@ -2372,7 +2372,8 @@
 
     /* it has started, possibly even completed but that knowledge isn't stored
        in this bit! */
-    conn->bits.protoconnstart = TRUE;
+    if (!result)
+      conn->bits.protoconnstart = TRUE;
   }
 
   return result; /* pass back status */
@@ -3920,32 +3921,43 @@
   data->state.crlf_conversions = 0; /* reset CRLF conversion counter */
 #endif /* CURL_DO_LINEEND_CONV */
 
-  if(CURL_SOCKET_BAD == conn->sock[FIRSTSOCKET]) {
-    bool connected = FALSE;
+  for(;;) {
+    /* loop for CURL_SERVER_CLOSED_CONNECTION */
 
-    /* Connect only if not already connected! */
-    result = ConnectPlease(data, conn, hostaddr, &connected);
-
-    if(connected) {
-      result = Curl_protocol_connect(conn, protocol_done);
-      if(CURLE_OK == result)
-        conn->bits.tcpconnect = TRUE;
-    }
-    else
-      conn->bits.tcpconnect = FALSE;
+    if(CURL_SOCKET_BAD == conn->sock[FIRSTSOCKET]) {
+      bool connected = FALSE;
 
+      /* Connect only if not already connected! */
+      result = ConnectPlease(data, conn, hostaddr, &connected);
+  
+      if(connected) {
+        result = Curl_protocol_connect(conn, protocol_done);
+        if(CURLE_OK == result)
+          conn->bits.tcpconnect = TRUE;
+      }
+      else
+        conn->bits.tcpconnect = FALSE;
+  
+      /* if the connection was closed by the server while exchanging
+         authentication informations, retry with the new set
+         authentication information */
+      if(CURLE_SERVER_CLOSED_CONNECTION == result)
+        continue;
 
-    if(CURLE_OK != result)
-      return result;
-  }
-  else {
-    Curl_pgrsTime(data, TIMER_CONNECT); /* we're connected already */
-    conn->bits.tcpconnect = TRUE;
-    *protocol_done = TRUE;
-    if(data->set.verbose)
-      verboseconnect(conn);
+      if(CURLE_OK != result)
+        return result;
+    }
+    else {
+      Curl_pgrsTime(data, TIMER_CONNECT); /* we're connected already */
+      conn->bits.tcpconnect = TRUE;
+      *protocol_done = TRUE;
+      if(data->set.verbose)
+        verboseconnect(conn);
+    }
+    /* Stop the loop now */
+    break;
   }
-
+  
   conn->now = Curl_tvnow(); /* time this *after* the connect is done, we
                                set this here perhaps a second time */