diff --git a/ArduCopter/Parameters.pde b/ArduCopter/Parameters.pde
index 247a71546d..407ad2279d 100644
--- a/ArduCopter/Parameters.pde
+++ b/ArduCopter/Parameters.pde
@@ -120,10 +120,10 @@ const AP_Param::Info var_info[] PROGMEM = {
 
     // @Param: FS_GPS_ENABLE
     // @DisplayName: GPS Failsafe Enable
-    // @Description: Controls whether failsafe will be invoked when gps signal is lost
-    // @Values: 0:Disabled,1:Enabled
+    // @Description: Controls what action will be taken if GPS signal is lost for at least 5 seconds
+    // @Values: 0:Disabled,1:Land,2:AltHold,3:Land even from Stabilize
     // @User: Standard
-    GSCALAR(failsafe_gps_enabled, "FS_GPS_ENABLE", FS_GPS),
+    GSCALAR(failsafe_gps_enabled, "FS_GPS_ENABLE", FS_GPS_LAND),
 
     // @Param: FS_GCS_ENABLE
     // @DisplayName: Ground Station Failsafe Enable
diff --git a/ArduCopter/config.h b/ArduCopter/config.h
index d0dacc19e8..6ebf6a51b6 100644
--- a/ArduCopter/config.h
+++ b/ArduCopter/config.h
@@ -362,9 +362,6 @@
 #endif
 
 // GPS failsafe
-#ifndef FS_GPS
- # define FS_GPS                        ENABLED
-#endif
 #ifndef FAILSAFE_GPS_TIMEOUT_MS
  # define FAILSAFE_GPS_TIMEOUT_MS       5000    // gps failsafe triggers after 5 seconds with no GPS
 #endif
@@ -488,12 +485,6 @@
 //////////////////////////////////////////////////////////////////////////////
 // Throttle Failsafe
 //
-// possible values for FS_THR parameter
-#define FS_THR_DISABLED                    0
-#define FS_THR_ENABLED_ALWAYS_RTL          1
-#define FS_THR_ENABLED_CONTINUE_MISSION    2
-#define FS_THR_ENABLED_ALWAYS_LAND         3
-
 #ifndef FS_THR_VALUE_DEFAULT
  # define FS_THR_VALUE_DEFAULT             975
 #endif
diff --git a/ArduCopter/defines.h b/ArduCopter/defines.h
index 548d719058..dd458a3b95 100644
--- a/ArduCopter/defines.h
+++ b/ArduCopter/defines.h
@@ -479,4 +479,16 @@ enum ap_message {
 #define ARMING_CHECK_RC                     0x40
 #define ARMING_CHECK_VOLTAGE                0x80
 
+// Radio failsafe definitions (FS_THR parameter)
+#define FS_THR_DISABLED                    0
+#define FS_THR_ENABLED_ALWAYS_RTL          1
+#define FS_THR_ENABLED_CONTINUE_MISSION    2
+#define FS_THR_ENABLED_ALWAYS_LAND         3
+
+// GPS Failsafe definitions (FS_GPS_ENABLE parameter)
+#define FS_GPS_DISABLED                     0       // GPS failsafe disabled
+#define FS_GPS_LAND                         1       // switch to LAND mode on GPS Failsafe
+#define FS_GPS_ALTHOLD                      2       // switch to ALTHOLD mode on GPS failsafe
+#define FS_GPS_LAND_EVEN_STABILIZE          3       // switch to LAND mode on GPS failsafe even if in a manual flight mode like Stabilize
+
 #endif // _DEFINES_H
diff --git a/ArduCopter/events.pde b/ArduCopter/events.pde
index 73cab9a0c0..cc2afb393f 100644
--- a/ArduCopter/events.pde
+++ b/ArduCopter/events.pde
@@ -138,7 +138,7 @@ static void failsafe_gps_check()
     uint32_t last_gps_update_ms;
 
     // return immediately if gps failsafe is disabled or we have never had GPS lock
-    if (!g.failsafe_gps_enabled || !ap.home_is_set) {
+    if (g.failsafe_gps_enabled == FS_GPS_DISABLED || !ap.home_is_set) {
         // if we have just disabled the gps failsafe, ensure the gps failsafe event is cleared
         if (failsafe.gps) {
             failsafe_gps_off_event();
@@ -171,16 +171,14 @@ static void failsafe_gps_check()
     gcs_send_text_P(SEVERITY_LOW,PSTR("Lost GPS!"));
     Log_Write_Error(ERROR_SUBSYSTEM_FAILSAFE_GPS, ERROR_CODE_FAILSAFE_OCCURRED);
 
-    // take action based on flight mode
-    if(mode_requires_GPS(control_mode))
-        set_mode(LAND);
-
-    // land if circular fence is enabled
-#if AC_FENCE == ENABLED
-    if((fence.get_enabled_fences() & AC_FENCE_TYPE_CIRCLE) != 0) {
-        set_mode(LAND);
+    // take action based on flight mode and FS_GPS_ENABLED parameter
+    if (mode_requires_GPS(control_mode) || g.failsafe_gps_enabled == FS_GPS_LAND_EVEN_STABILIZE) {
+        if (g.failsafe_gps_enabled == FS_GPS_ALTHOLD && !failsafe.radio) {
+            set_mode(ALT_HOLD);
+        }else{
+            set_mode(LAND);
+        }
     }
-#endif
 }
 
 // failsafe_gps_off_event - actions to take when GPS contact is restored