diff --git a/meta/classes/kernel.bbclass b/meta/classes/kernel.bbclass
index 31e633b..b82af74 100644
--- a/meta/classes/kernel.bbclass
+++ b/meta/classes/kernel.bbclass
@@ -130,7 +130,7 @@ kernel_do_install() {
 	# Support for external module building - create a minimal copy of the
 	# kernel source tree.
 	#
-	kerneldir=${D}/kernel
+	kerneldir=${D}/usr/src/kernel-headers
 	install -d $kerneldir
 
 	#
@@ -183,10 +183,11 @@ kernel_do_install() {
 		cp arch/powerpc/lib/crtsavres.o $kerneldir/arch/powerpc/lib/crtsavres.o
 	fi
 
-	# Remove the following binaries which cause strip errors
+	# Remove the following binaries which cause strip or arch QA errors
 	# during do_package for cross-compiled platforms
 	bin_files="arch/powerpc/boot/addnote arch/powerpc/boot/hack-coff \
-	           arch/powerpc/boot/mktree"
+	           arch/powerpc/boot/mktree scripts/kconfig/zconf.tab.o \
+		   scripts/kconfig/conf.o"
 	for entry in $bin_files; do
 		rm -f $kerneldir/$entry
 	done
@@ -247,13 +248,15 @@ EXPORT_FUNCTIONS do_compile do_install do_configure
 
 # kernel-base becomes kernel-${KERNEL_VERSION}
 # kernel-image becomes kernel-image-${KERNEL_VERISON}
-PACKAGES = "kernel kernel-base kernel-vmlinux kernel-image kernel-dev kernel-misc"
+PACKAGES = "kernel kernel-base kernel-vmlinux kernel-image kernel-dev \
+            kernel-misc kernel-headers"
 FILES = ""
 FILES_kernel-image = "/boot/${KERNEL_IMAGETYPE}*"
 FILES_kernel-dev = "/boot/System.map* /boot/Module.symvers* /boot/config*"
 FILES_kernel-vmlinux = "/boot/vmlinux*"
 # misc is a package to contain files we need in staging
 FILES_kernel-misc = "/kernel/include/config /kernel/scripts /kernel/drivers/crypto /kernel/drivers/media"
+FILES_kernel-headers = "/usr/src/kernel-headers"
 RDEPENDS_kernel = "kernel-base"
 # Allow machines to override this dependency if kernel image files are 
 # not wanted in images as standard
diff --git a/meta/conf/bitbake.conf b/meta/conf/bitbake.conf
index 9b26580..9f3abee 100644
--- a/meta/conf/bitbake.conf
+++ b/meta/conf/bitbake.conf
@@ -380,7 +380,7 @@ SDKPATHNATIVE = "${SDKPATH}/sysroots/${SDK_SYS}"
 ##################################################################
 
 OLDEST_KERNEL = "2.6.16"
-STAGING_KERNEL_DIR = "${STAGING_DIR_HOST}/kernel"
+STAGING_KERNEL_DIR = "${STAGING_DIR_HOST}/usr/src/kernel-headers"
 
 ##################################################################
 # Specific image creation and rootfs population info.