diff --git a/drivers/hv/hv_kvp.c b/drivers/hv/hv_kvp.c
index 0012eed..eb4d073 100644
--- a/drivers/hv/hv_kvp.c
+++ b/drivers/hv/hv_kvp.c
@@ -48,13 +48,24 @@
 	void *kvp_context; /* for the channel callback */
 } kvp_transaction;
 
+/*
+ * Before we can accept KVP messages from the host, we need
+ * to handshake with the user level daemon. This state tracks
+ * if we are in the handshake phase.
+ */
+static bool in_hand_shake = true;
+
+/*
+ * This state maintains the version number registered by the daemon.
+ */
+static int dm_reg_value;
+
 static void kvp_send_key(struct work_struct *dummy);
 
-#define TIMEOUT_FIRED 1
 
 static void kvp_respond_to_host(char *key, char *value, int error);
 static void kvp_work_func(struct work_struct *dummy);
-static void kvp_register(void);
+static void kvp_register(int);
 
 static DECLARE_DELAYED_WORK(kvp_work, kvp_work_func);
 static DECLARE_WORK(kvp_sendkey_work, kvp_send_key);
@@ -68,7 +79,7 @@
  */
 
 static void
-kvp_register(void)
+kvp_register(int reg_value)
 {
 
 	struct cn_msg *msg;
@@ -83,7 +94,7 @@
 		msg->id.idx =  CN_KVP_IDX;
 		msg->id.val = CN_KVP_VAL;
 
-		kvp_msg->kvp_hdr.operation = KVP_OP_REGISTER;
+		kvp_msg->kvp_hdr.operation = reg_value;
 		strcpy(version, HV_DRV_VERSION);
 		msg->len = sizeof(struct hv_kvp_msg);
 		cn_netlink_send(msg, 0, GFP_ATOMIC);
@@ -97,9 +108,43 @@
 	 * If the timer fires, the user-mode component has not responded;
 	 * process the pending transaction.
 	 */
-	kvp_respond_to_host("Unknown key", "Guest timed out", TIMEOUT_FIRED);
+	kvp_respond_to_host("Unknown key", "Guest timed out", HV_E_FAIL);
 }
 
+static int kvp_handle_handshake(struct hv_kvp_msg *msg)
+{
+	int ret = 1;
+
+	switch (msg->kvp_hdr.operation) {
+	case KVP_OP_REGISTER:
+		dm_reg_value = KVP_OP_REGISTER;
+		pr_info("KVP: IP injection functionality not available\n");
+		pr_info("KVP: Upgrade the KVP daemon\n");
+		break;
+	case KVP_OP_REGISTER1:
+		dm_reg_value = KVP_OP_REGISTER1;
+		break;
+	default:
+		pr_info("KVP: incompatible daemon\n");
+		pr_info("KVP: KVP version: %d, Daemon version: %d\n",
+			KVP_OP_REGISTER1, msg->kvp_hdr.operation);
+		ret = 0;
+	}
+
+	if (ret) {
+		/*
+		 * We have a compatible daemon; complete the handshake.
+		 */
+		pr_info("KVP: user-mode registering done.\n");
+		kvp_register(dm_reg_value);
+		kvp_transaction.active = false;
+		if (kvp_transaction.kvp_context)
+			hv_kvp_onchannelcallback(kvp_transaction.kvp_context);
+	}
+	return ret;
+}
+
+
 /*
  * Callback when data is received from user mode.
  */
@@ -109,27 +154,52 @@
 {
 	struct hv_kvp_msg *message;
 	struct hv_kvp_msg_enumerate *data;
+	int	error = 0;
 
 	message = (struct hv_kvp_msg *)msg->data;
-	switch (message->kvp_hdr.operation) {
+
+	/*
+	 * If we are negotiating the version information
+	 * with the daemon; handle that first.
+	 */
+
+	if (in_hand_shake) {
+		if (kvp_handle_handshake(message))
+			in_hand_shake = false;
+		return;
+	}
+
+	/*
+	 * Based on the version of the daemon, we propagate errors from the
+	 * daemon differently.
+	 */
+
+	data = &message->body.kvp_enum_data;
+
+	switch (dm_reg_value) {
 	case KVP_OP_REGISTER:
-		pr_info("KVP: user-mode registering done.\n");
-		kvp_register();
-		kvp_transaction.active = false;
-		hv_kvp_onchannelcallback(kvp_transaction.kvp_context);
+		/*
+		 * Null string is used to pass back error condition.
+		 */
+		if (data->data.key[0] == 0)
+			error = HV_S_CONT;
 		break;
 
-	default:
-		data = &message->body.kvp_enum_data;
+	case KVP_OP_REGISTER1:
 		/*
-		 * Complete the transaction by forwarding the key value
-		 * to the host. But first, cancel the timeout.
+		 * We use the message header information from
+		 * the user level daemon to transmit errors.
 		 */
-		if (cancel_delayed_work_sync(&kvp_work))
-			kvp_respond_to_host(data->data.key,
-					 data->data.value,
-					!strlen(data->data.key));
+		error = message->error;
+		break;
 	}
+
+	/*
+	 * Complete the transaction by forwarding the key value
+	 * to the host. But first, cancel the timeout.
+	 */
+	if (cancel_delayed_work_sync(&kvp_work))
+		kvp_respond_to_host(data->data.key, data->data.value, error);
 }
 
 static void
@@ -287,6 +357,7 @@
 		 */
 		return;
 
+	icmsghdrp->status = error;
 
 	/*
 	 * If the error parameter is set, terminate the host's enumeration
@@ -294,15 +365,12 @@
 	 */
 	if (error) {
 		/*
-		 * Something failed or the we have timedout;
-		 * terminate the current  host-side iteration.
+		 * Something failed or we have timedout;
+		 * terminate the current host-side iteration.
 		 */
-		icmsghdrp->status = HV_S_CONT;
 		goto response_done;
 	}
 
-	icmsghdrp->status = HV_S_OK;
-
 	kvp_msg = (struct hv_kvp_msg *)
 			&recv_buffer[sizeof(struct vmbuspipe_hdr) +
 			sizeof(struct icmsg_hdr)];
diff --git a/include/linux/hyperv.h b/include/linux/hyperv.h
index 11afc4e..b587c44 100644
--- a/include/linux/hyperv.h
+++ b/include/linux/hyperv.h
@@ -181,6 +181,17 @@
 	KVP_POOL_COUNT /* Number of pools, must be last. */
 };
 
+/*
+ * Some Hyper-V status codes.
+ */
+
+#define HV_S_OK				0x00000000
+#define HV_E_FAIL			0x80004005
+#define HV_S_CONT			0x80070103
+#define HV_ERROR_NOT_SUPPORTED		0x80070032
+#define HV_ERROR_MACHINE_LOCKED		0x800704F7
+#define HV_ERROR_DEVICE_NOT_CONNECTED	0x8007048F
+
 #define ADDR_FAMILY_NONE	0x00
 #define ADDR_FAMILY_IPV4	0x01
 #define ADDR_FAMILY_IPV6	0x02
@@ -1048,12 +1059,6 @@
 #define ICMSGHDRFLAG_REQUEST		2
 #define ICMSGHDRFLAG_RESPONSE		4
 
-#define HV_S_OK				0x00000000
-#define HV_E_FAIL			0x80004005
-#define HV_S_CONT			0x80070103
-#define HV_ERROR_NOT_SUPPORTED		0x80070032
-#define HV_ERROR_MACHINE_LOCKED		0x800704F7
-#define HV_ERROR_DEVICE_NOT_CONNECTED	0x8007048F
 
 /*
  * While we want to handle util services as regular devices,
diff --git a/tools/hv/hv_kvp_daemon.c b/tools/hv/hv_kvp_daemon.c
index 8fbcf7b..069e2b38 100644
--- a/tools/hv/hv_kvp_daemon.c
+++ b/tools/hv/hv_kvp_daemon.c
@@ -71,13 +71,14 @@
 static char kvp_send_buffer[4096];
 static char kvp_recv_buffer[4096 * 2];
 static struct sockaddr_nl addr;
+static int in_hand_shake = 1;
 
 static char *os_name = "";
 static char *os_major = "";
 static char *os_minor = "";
 static char *processor_arch;
 static char *os_build;
-static char *lic_version;
+static char *lic_version = "Unknown version";
 static struct utsname uts_buf;
 
 
@@ -394,7 +395,7 @@
 	return 1;
 }
 
-static void kvp_pool_enumerate(int pool, int index, __u8 *key, int key_size,
+static int kvp_pool_enumerate(int pool, int index, __u8 *key, int key_size,
 				__u8 *value, int value_size)
 {
 	struct kvp_record *record;
@@ -406,16 +407,12 @@
 	record = kvp_file_info[pool].records;
 
 	if (index >= kvp_file_info[pool].num_records) {
-		/*
-		 * This is an invalid index; terminate enumeration;
-		 * - a NULL value will do the trick.
-		 */
-		strcpy(value, "");
-		return;
+		return 1;
 	}
 
 	memcpy(key, record[index].key, key_size);
 	memcpy(value, record[index].value, value_size);
+	return 0;
 }
 
 
@@ -646,6 +643,8 @@
 	char	*p;
 	char	*key_value;
 	char	*key_name;
+	int	op;
+	int	pool;
 
 	daemon(1, 0);
 	openlog("KVP", 0, LOG_USER);
@@ -687,7 +686,7 @@
 	message->id.val = CN_KVP_VAL;
 
 	hv_msg = (struct hv_kvp_msg *)message->data;
-	hv_msg->kvp_hdr.operation = KVP_OP_REGISTER;
+	hv_msg->kvp_hdr.operation = KVP_OP_REGISTER1;
 	message->ack = 0;
 	message->len = sizeof(struct hv_kvp_msg);
 
@@ -721,12 +720,21 @@
 		incoming_cn_msg = (struct cn_msg *)NLMSG_DATA(incoming_msg);
 		hv_msg = (struct hv_kvp_msg *)incoming_cn_msg->data;
 
-		switch (hv_msg->kvp_hdr.operation) {
-		case KVP_OP_REGISTER:
+		/*
+		 * We will use the KVP header information to pass back
+		 * the error from this daemon. So, first copy the state
+		 * and set the error code to success.
+		 */
+		op = hv_msg->kvp_hdr.operation;
+		pool = hv_msg->kvp_hdr.pool;
+		hv_msg->error = HV_S_OK;
+
+		if ((in_hand_shake) && (op == KVP_OP_REGISTER1)) {
 			/*
 			 * Driver is registering with us; stash away the version
 			 * information.
 			 */
+			in_hand_shake = 0;
 			p = (char *)hv_msg->body.kvp_register.version;
 			lic_version = malloc(strlen(p) + 1);
 			if (lic_version) {
@@ -737,44 +745,39 @@
 				syslog(LOG_ERR, "malloc failed");
 			}
 			continue;
+		}
 
-		/*
-		 * The current protocol with the kernel component uses a
-		 * NULL key name to pass an error condition.
-		 * For the SET, GET and DELETE operations,
-		 * use the existing protocol to pass back error.
-		 */
-
+		switch (op) {
 		case KVP_OP_SET:
-			if (kvp_key_add_or_modify(hv_msg->kvp_hdr.pool,
+			if (kvp_key_add_or_modify(pool,
 					hv_msg->body.kvp_set.data.key,
 					hv_msg->body.kvp_set.data.key_size,
 					hv_msg->body.kvp_set.data.value,
 					hv_msg->body.kvp_set.data.value_size))
-				strcpy(hv_msg->body.kvp_set.data.key, "");
+					hv_msg->error = HV_S_CONT;
 			break;
 
 		case KVP_OP_GET:
-			if (kvp_get_value(hv_msg->kvp_hdr.pool,
+			if (kvp_get_value(pool,
 					hv_msg->body.kvp_set.data.key,
 					hv_msg->body.kvp_set.data.key_size,
 					hv_msg->body.kvp_set.data.value,
 					hv_msg->body.kvp_set.data.value_size))
-				strcpy(hv_msg->body.kvp_set.data.key, "");
+					hv_msg->error = HV_S_CONT;
 			break;
 
 		case KVP_OP_DELETE:
-			if (kvp_key_delete(hv_msg->kvp_hdr.pool,
+			if (kvp_key_delete(pool,
 					hv_msg->body.kvp_delete.key,
 					hv_msg->body.kvp_delete.key_size))
-				strcpy(hv_msg->body.kvp_delete.key, "");
+					hv_msg->error = HV_S_CONT;
 			break;
 
 		default:
 			break;
 		}
 
-		if (hv_msg->kvp_hdr.operation != KVP_OP_ENUMERATE)
+		if (op != KVP_OP_ENUMERATE)
 			goto kvp_done;
 
 		/*
@@ -782,13 +785,14 @@
 		 * both the key and the value; if not read from the
 		 * appropriate pool.
 		 */
-		if (hv_msg->kvp_hdr.pool != KVP_POOL_AUTO) {
-			kvp_pool_enumerate(hv_msg->kvp_hdr.pool,
+		if (pool != KVP_POOL_AUTO) {
+			if (kvp_pool_enumerate(pool,
 					hv_msg->body.kvp_enum_data.index,
 					hv_msg->body.kvp_enum_data.data.key,
 					HV_KVP_EXCHANGE_MAX_KEY_SIZE,
 					hv_msg->body.kvp_enum_data.data.value,
-					HV_KVP_EXCHANGE_MAX_VALUE_SIZE);
+					HV_KVP_EXCHANGE_MAX_VALUE_SIZE))
+					hv_msg->error = HV_S_CONT;
 			goto kvp_done;
 		}
 
@@ -841,11 +845,7 @@
 			strcpy(key_name, "ProcessorArchitecture");
 			break;
 		default:
-			strcpy(key_value, "Unknown Key");
-			/*
-			 * We use a null key name to terminate enumeration.
-			 */
-			strcpy(key_name, "");
+			hv_msg->error = HV_S_CONT;
 			break;
 		}
 		/*