diff --git a/cmd/swarm/main.go b/cmd/swarm/main.go
index 258f24d320..ac09ae9981 100644
--- a/cmd/swarm/main.go
+++ b/cmd/swarm/main.go
@@ -322,23 +322,23 @@ Downloads a swarm bzz uri to the given dir. When no dir is provided, working dir
 			Description:        "Updates a MANIFEST by adding/removing/updating the hash of a path.\nCOMMAND could be: add, update, remove",
 			Subcommands: []cli.Command{
 				{
-					Action:             add,
+					Action:             manifestAdd,
 					CustomHelpTemplate: helpTemplate,
 					Name:               "add",
 					Usage:              "add a new path to the manifest",
-					ArgsUsage:          "<MANIFEST> <path> <hash> [<content-type>]",
+					ArgsUsage:          "<MANIFEST> <path> <hash>",
 					Description:        "Adds a new path to the manifest",
 				},
 				{
-					Action:             update,
+					Action:             manifestUpdate,
 					CustomHelpTemplate: helpTemplate,
 					Name:               "update",
 					Usage:              "update the hash for an already existing path in the manifest",
-					ArgsUsage:          "<MANIFEST> <path> <newhash> [<newcontent-type>]",
+					ArgsUsage:          "<MANIFEST> <path> <newhash>",
 					Description:        "Update the hash for an already existing path in the manifest",
 				},
 				{
-					Action:             remove,
+					Action:             manifestRemove,
 					CustomHelpTemplate: helpTemplate,
 					Name:               "remove",
 					Usage:              "removes a path from the manifest",
diff --git a/cmd/swarm/manifest.go b/cmd/swarm/manifest.go
index 82166edf6c..0216ffc1dd 100644
--- a/cmd/swarm/manifest.go
+++ b/cmd/swarm/manifest.go
@@ -18,10 +18,8 @@
 package main
 
 import (
-	"encoding/json"
 	"fmt"
-	"mime"
-	"path/filepath"
+	"os"
 	"strings"
 
 	"github.com/ethereum/go-ethereum/cmd/utils"
@@ -30,127 +28,118 @@ import (
 	"gopkg.in/urfave/cli.v1"
 )
 
-const bzzManifestJSON = "application/bzz-manifest+json"
-
-func add(ctx *cli.Context) {
+// manifestAdd adds a new entry to the manifest at the given path.
+// New entry hash, the last argument, must be the hash of a manifest
+// with only one entry, which meta-data will be added to the original manifest.
+// On success, this function will print new (updated) manifest's hash.
+func manifestAdd(ctx *cli.Context) {
 	args := ctx.Args()
-	if len(args) < 3 {
-		utils.Fatalf("Need at least three arguments <MHASH> <path> <HASH> [<content-type>]")
+	if len(args) != 3 {
+		utils.Fatalf("Need exactly three arguments <MHASH> <path> <HASH>")
 	}
 
 	var (
 		mhash = args[0]
 		path  = args[1]
 		hash  = args[2]
-
-		ctype        string
-		wantManifest = ctx.GlobalBoolT(SwarmWantManifestFlag.Name)
-		mroot        api.Manifest
 	)
 
-	if len(args) > 3 {
-		ctype = args[3]
-	} else {
-		ctype = mime.TypeByExtension(filepath.Ext(path))
+	bzzapi := strings.TrimRight(ctx.GlobalString(SwarmApiFlag.Name), "/")
+	client := swarm.NewClient(bzzapi)
+
+	m, _, err := client.DownloadManifest(hash)
+	if err != nil {
+		utils.Fatalf("Error downloading manifest to add: %v", err)
+	}
+	l := len(m.Entries)
+	if l == 0 {
+		utils.Fatalf("No entries in manifest %s", hash)
+	} else if l > 1 {
+		utils.Fatalf("Too many entries in manifest %s", hash)
 	}
 
-	newManifest := addEntryToManifest(ctx, mhash, path, hash, ctype)
+	newManifest := addEntryToManifest(client, mhash, path, m.Entries[0])
 	fmt.Println(newManifest)
-
-	if !wantManifest {
-		// Print the manifest. This is the only output to stdout.
-		mrootJSON, _ := json.MarshalIndent(mroot, "", "  ")
-		fmt.Println(string(mrootJSON))
-		return
-	}
 }
 
-func update(ctx *cli.Context) {
-
+// manifestUpdate replaces an existing entry of the manifest at the given path.
+// New entry hash, the last argument, must be the hash of a manifest
+// with only one entry, which meta-data will be added to the original manifest.
+// On success, this function will print hash of the updated manifest.
+func manifestUpdate(ctx *cli.Context) {
 	args := ctx.Args()
-	if len(args) < 3 {
-		utils.Fatalf("Need at least three arguments <MHASH> <path> <HASH>")
+	if len(args) != 3 {
+		utils.Fatalf("Need exactly three arguments <MHASH> <path> <HASH>")
 	}
 
 	var (
 		mhash = args[0]
 		path  = args[1]
 		hash  = args[2]
-
-		ctype        string
-		wantManifest = ctx.GlobalBoolT(SwarmWantManifestFlag.Name)
-		mroot        api.Manifest
 	)
-	if len(args) > 3 {
-		ctype = args[3]
-	} else {
-		ctype = mime.TypeByExtension(filepath.Ext(path))
+
+	bzzapi := strings.TrimRight(ctx.GlobalString(SwarmApiFlag.Name), "/")
+	client := swarm.NewClient(bzzapi)
+
+	m, _, err := client.DownloadManifest(hash)
+	if err != nil {
+		utils.Fatalf("Error downloading manifest to update: %v", err)
+	}
+	l := len(m.Entries)
+	if l == 0 {
+		utils.Fatalf("No entries in manifest %s", hash)
+	} else if l > 1 {
+		utils.Fatalf("Too many entries in manifest %s", hash)
 	}
 
-	newManifest := updateEntryInManifest(ctx, mhash, path, hash, ctype)
+	newManifest, _, defaultEntryUpdated := updateEntryInManifest(client, mhash, path, m.Entries[0], true)
+	if defaultEntryUpdated {
+		// Print informational message to stderr
+		// allowing the user to get the new manifest hash from stdout
+		// without the need to parse the complete output.
+		fmt.Fprintln(os.Stderr, "Manifest default entry is updated, too")
+	}
 	fmt.Println(newManifest)
-
-	if !wantManifest {
-		// Print the manifest. This is the only output to stdout.
-		mrootJSON, _ := json.MarshalIndent(mroot, "", "  ")
-		fmt.Println(string(mrootJSON))
-		return
-	}
 }
 
-func remove(ctx *cli.Context) {
+// manifestRemove removes an existing entry of the manifest at the given path.
+// On success, this function will print hash of the manifest which does not
+// contain the path.
+func manifestRemove(ctx *cli.Context) {
 	args := ctx.Args()
-	if len(args) < 2 {
-		utils.Fatalf("Need at least two arguments <MHASH> <path>")
+	if len(args) != 2 {
+		utils.Fatalf("Need exactly two arguments <MHASH> <path>")
 	}
 
 	var (
 		mhash = args[0]
 		path  = args[1]
-
-		wantManifest = ctx.GlobalBoolT(SwarmWantManifestFlag.Name)
-		mroot        api.Manifest
 	)
 
-	newManifest := removeEntryFromManifest(ctx, mhash, path)
-	fmt.Println(newManifest)
+	bzzapi := strings.TrimRight(ctx.GlobalString(SwarmApiFlag.Name), "/")
+	client := swarm.NewClient(bzzapi)
 
-	if !wantManifest {
-		// Print the manifest. This is the only output to stdout.
-		mrootJSON, _ := json.MarshalIndent(mroot, "", "  ")
-		fmt.Println(string(mrootJSON))
-		return
-	}
+	newManifest := removeEntryFromManifest(client, mhash, path)
+	fmt.Println(newManifest)
 }
 
-func addEntryToManifest(ctx *cli.Context, mhash, path, hash, ctype string) string {
-
-	var (
-		bzzapi           = strings.TrimRight(ctx.GlobalString(SwarmApiFlag.Name), "/")
-		client           = swarm.NewClient(bzzapi)
-		longestPathEntry = api.ManifestEntry{}
-	)
+func addEntryToManifest(client *swarm.Client, mhash, path string, entry api.ManifestEntry) string {
+	var longestPathEntry = api.ManifestEntry{}
 
 	mroot, isEncrypted, err := client.DownloadManifest(mhash)
 	if err != nil {
 		utils.Fatalf("Manifest download failed: %v", err)
 	}
 
-	//TODO: check if the "hash" to add is valid and present in swarm
-	_, _, err = client.DownloadManifest(hash)
-	if err != nil {
-		utils.Fatalf("Hash to add is not present: %v", err)
-	}
-
 	// See if we path is in this Manifest or do we have to dig deeper
-	for _, entry := range mroot.Entries {
-		if path == entry.Path {
+	for _, e := range mroot.Entries {
+		if path == e.Path {
 			utils.Fatalf("Path %s already present, not adding anything", path)
 		} else {
-			if entry.ContentType == bzzManifestJSON {
-				prfxlen := strings.HasPrefix(path, entry.Path)
+			if e.ContentType == api.ManifestType {
+				prfxlen := strings.HasPrefix(path, e.Path)
 				if prfxlen && len(path) > len(longestPathEntry.Path) {
-					longestPathEntry = entry
+					longestPathEntry = e
 				}
 			}
 		}
@@ -159,25 +148,21 @@ func addEntryToManifest(ctx *cli.Context, mhash, path, hash, ctype string) strin
 	if longestPathEntry.Path != "" {
 		// Load the child Manifest add the entry there
 		newPath := path[len(longestPathEntry.Path):]
-		newHash := addEntryToManifest(ctx, longestPathEntry.Hash, newPath, hash, ctype)
+		newHash := addEntryToManifest(client, longestPathEntry.Hash, newPath, entry)
 
 		// Replace the hash for parent Manifests
 		newMRoot := &api.Manifest{}
-		for _, entry := range mroot.Entries {
-			if longestPathEntry.Path == entry.Path {
-				entry.Hash = newHash
+		for _, e := range mroot.Entries {
+			if longestPathEntry.Path == e.Path {
+				e.Hash = newHash
 			}
-			newMRoot.Entries = append(newMRoot.Entries, entry)
+			newMRoot.Entries = append(newMRoot.Entries, e)
 		}
 		mroot = newMRoot
 	} else {
 		// Add the entry in the leaf Manifest
-		newEntry := api.ManifestEntry{
-			Hash:        hash,
-			Path:        path,
-			ContentType: ctype,
-		}
-		mroot.Entries = append(mroot.Entries, newEntry)
+		entry.Path = path
+		mroot.Entries = append(mroot.Entries, entry)
 	}
 
 	newManifestHash, err := client.UploadManifest(mroot, isEncrypted)
@@ -185,14 +170,16 @@ func addEntryToManifest(ctx *cli.Context, mhash, path, hash, ctype string) strin
 		utils.Fatalf("Manifest upload failed: %v", err)
 	}
 	return newManifestHash
-
 }
 
-func updateEntryInManifest(ctx *cli.Context, mhash, path, hash, ctype string) string {
-
+// updateEntryInManifest updates an existing entry o path with a new one in the manifest with provided mhash
+// finding the path recursively through all nested manifests. Argument isRoot is used for default
+// entry update detection. If the updated entry has the same hash as the default entry, then the
+// default entry in root manifest will be updated too.
+// Returned values are the new manifest hash, hash of the entry that was replaced by the new entry and
+// a a bool that is true if default entry is updated.
+func updateEntryInManifest(client *swarm.Client, mhash, path string, entry api.ManifestEntry, isRoot bool) (newManifestHash, oldHash string, defaultEntryUpdated bool) {
 	var (
-		bzzapi           = strings.TrimRight(ctx.GlobalString(SwarmApiFlag.Name), "/")
-		client           = swarm.NewClient(bzzapi)
 		newEntry         = api.ManifestEntry{}
 		longestPathEntry = api.ManifestEntry{}
 	)
@@ -202,17 +189,18 @@ func updateEntryInManifest(ctx *cli.Context, mhash, path, hash, ctype string) st
 		utils.Fatalf("Manifest download failed: %v", err)
 	}
 
-	//TODO: check if the "hash" with which to update is valid and present in swarm
-
 	// See if we path is in this Manifest or do we have to dig deeper
-	for _, entry := range mroot.Entries {
-		if path == entry.Path {
-			newEntry = entry
+	for _, e := range mroot.Entries {
+		if path == e.Path {
+			newEntry = e
+			// keep the reference of the hash of the entry that should be replaced
+			// for default entry detection
+			oldHash = e.Hash
 		} else {
-			if entry.ContentType == bzzManifestJSON {
-				prfxlen := strings.HasPrefix(path, entry.Path)
+			if e.ContentType == api.ManifestType {
+				prfxlen := strings.HasPrefix(path, e.Path)
 				if prfxlen && len(path) > len(longestPathEntry.Path) {
-					longestPathEntry = entry
+					longestPathEntry = e
 				}
 			}
 		}
@@ -225,50 +213,50 @@ func updateEntryInManifest(ctx *cli.Context, mhash, path, hash, ctype string) st
 	if longestPathEntry.Path != "" {
 		// Load the child Manifest add the entry there
 		newPath := path[len(longestPathEntry.Path):]
-		newHash := updateEntryInManifest(ctx, longestPathEntry.Hash, newPath, hash, ctype)
+		var newHash string
+		newHash, oldHash, _ = updateEntryInManifest(client, longestPathEntry.Hash, newPath, entry, false)
 
 		// Replace the hash for parent Manifests
 		newMRoot := &api.Manifest{}
-		for _, entry := range mroot.Entries {
-			if longestPathEntry.Path == entry.Path {
-				entry.Hash = newHash
+		for _, e := range mroot.Entries {
+			if longestPathEntry.Path == e.Path {
+				e.Hash = newHash
 			}
-			newMRoot.Entries = append(newMRoot.Entries, entry)
+			newMRoot.Entries = append(newMRoot.Entries, e)
 
 		}
 		mroot = newMRoot
 	}
 
-	if newEntry.Path != "" {
+	// update the manifest if the new entry is found and
+	// check if default entry should be updated
+	if newEntry.Path != "" || isRoot {
 		// Replace the hash for leaf Manifest
 		newMRoot := &api.Manifest{}
-		for _, entry := range mroot.Entries {
-			if newEntry.Path == entry.Path {
-				myEntry := api.ManifestEntry{
-					Hash:        hash,
-					Path:        entry.Path,
-					ContentType: ctype,
-				}
-				newMRoot.Entries = append(newMRoot.Entries, myEntry)
-			} else {
+		for _, e := range mroot.Entries {
+			if newEntry.Path == e.Path {
+				entry.Path = e.Path
 				newMRoot.Entries = append(newMRoot.Entries, entry)
+			} else if isRoot && e.Path == "" && e.Hash == oldHash {
+				entry.Path = e.Path
+				newMRoot.Entries = append(newMRoot.Entries, entry)
+				defaultEntryUpdated = true
+			} else {
+				newMRoot.Entries = append(newMRoot.Entries, e)
 			}
 		}
 		mroot = newMRoot
 	}
 
-	newManifestHash, err := client.UploadManifest(mroot, isEncrypted)
+	newManifestHash, err = client.UploadManifest(mroot, isEncrypted)
 	if err != nil {
 		utils.Fatalf("Manifest upload failed: %v", err)
 	}
-	return newManifestHash
+	return newManifestHash, oldHash, defaultEntryUpdated
 }
 
-func removeEntryFromManifest(ctx *cli.Context, mhash, path string) string {
-
+func removeEntryFromManifest(client *swarm.Client, mhash, path string) string {
 	var (
-		bzzapi           = strings.TrimRight(ctx.GlobalString(SwarmApiFlag.Name), "/")
-		client           = swarm.NewClient(bzzapi)
 		entryToRemove    = api.ManifestEntry{}
 		longestPathEntry = api.ManifestEntry{}
 	)
@@ -283,7 +271,7 @@ func removeEntryFromManifest(ctx *cli.Context, mhash, path string) string {
 		if path == entry.Path {
 			entryToRemove = entry
 		} else {
-			if entry.ContentType == bzzManifestJSON {
+			if entry.ContentType == api.ManifestType {
 				prfxlen := strings.HasPrefix(path, entry.Path)
 				if prfxlen && len(path) > len(longestPathEntry.Path) {
 					longestPathEntry = entry
@@ -299,7 +287,7 @@ func removeEntryFromManifest(ctx *cli.Context, mhash, path string) string {
 	if longestPathEntry.Path != "" {
 		// Load the child Manifest remove the entry there
 		newPath := path[len(longestPathEntry.Path):]
-		newHash := removeEntryFromManifest(ctx, longestPathEntry.Hash, newPath)
+		newHash := removeEntryFromManifest(client, longestPathEntry.Hash, newPath)
 
 		// Replace the hash for parent Manifests
 		newMRoot := &api.Manifest{}
diff --git a/cmd/swarm/manifest_test.go b/cmd/swarm/manifest_test.go
new file mode 100644
index 0000000000..08fe0b2eb7
--- /dev/null
+++ b/cmd/swarm/manifest_test.go
@@ -0,0 +1,579 @@
+// Copyright 2018 The go-ethereum Authors
+// This file is part of go-ethereum.
+//
+// go-ethereum is free software: you can redistribute it and/or modify
+// it under the terms of the GNU General Public License as published by
+// the Free Software Foundation, either version 3 of the License, or
+// (at your option) any later version.
+//
+// go-ethereum is distributed in the hope that it will be useful,
+// but WITHOUT ANY WARRANTY; without even the implied warranty of
+// MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE. See the
+// GNU General Public License for more details.
+//
+// You should have received a copy of the GNU General Public License
+// along with go-ethereum. If not, see <http://www.gnu.org/licenses/>.
+
+package main
+
+import (
+	"bytes"
+	"io/ioutil"
+	"os"
+	"path/filepath"
+	"testing"
+
+	"github.com/ethereum/go-ethereum/swarm/api"
+	swarm "github.com/ethereum/go-ethereum/swarm/api/client"
+)
+
+// TestManifestChange tests manifest add, update and remove
+// cli commands without encryption.
+func TestManifestChange(t *testing.T) {
+	testManifestChange(t, false)
+}
+
+// TestManifestChange tests manifest add, update and remove
+// cli commands with encryption enabled.
+func TestManifestChangeEncrypted(t *testing.T) {
+	testManifestChange(t, true)
+}
+
+// testManifestChange performs cli commands:
+// - manifest add
+// - manifest update
+// - manifest remove
+// on a manifest, testing the functionality of this
+// comands on paths that are in root manifest or a nested one.
+// Argument encrypt controls whether to use encryption or not.
+func testManifestChange(t *testing.T, encrypt bool) {
+	t.Parallel()
+	cluster := newTestCluster(t, 1)
+	defer cluster.Shutdown()
+
+	tmp, err := ioutil.TempDir("", "swarm-manifest-test")
+	if err != nil {
+		t.Fatal(err)
+	}
+	defer os.RemoveAll(tmp)
+
+	origDir := filepath.Join(tmp, "orig")
+	if err := os.Mkdir(origDir, 0777); err != nil {
+		t.Fatal(err)
+	}
+
+	indexDataFilename := filepath.Join(origDir, "index.html")
+	err = ioutil.WriteFile(indexDataFilename, []byte("<h1>Test</h1>"), 0666)
+	if err != nil {
+		t.Fatal(err)
+	}
+	// Files paths robots.txt and robots.html share the same prefix "robots."
+	// which will result a manifest with a nested manifest under path "robots.".
+	// This will allow testing manifest changes on both root and nested manifest.
+	err = ioutil.WriteFile(filepath.Join(origDir, "robots.txt"), []byte("Disallow: /"), 0666)
+	if err != nil {
+		t.Fatal(err)
+	}
+	err = ioutil.WriteFile(filepath.Join(origDir, "robots.html"), []byte("<strong>No Robots Allowed</strong>"), 0666)
+	if err != nil {
+		t.Fatal(err)
+	}
+	err = ioutil.WriteFile(filepath.Join(origDir, "mutants.txt"), []byte("Frank\nMarcus"), 0666)
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	args := []string{
+		"--bzzapi",
+		cluster.Nodes[0].URL,
+		"--recursive",
+		"--defaultpath",
+		indexDataFilename,
+		"up",
+		origDir,
+	}
+	if encrypt {
+		args = append(args, "--encrypt")
+	}
+
+	origManifestHash := runSwarmExpectHash(t, args...)
+
+	checkHashLength(t, origManifestHash, encrypt)
+
+	client := swarm.NewClient(cluster.Nodes[0].URL)
+
+	// upload a new file and use its manifest to add it the original manifest.
+	t.Run("add", func(t *testing.T) {
+		humansData := []byte("Ann\nBob")
+		humansDataFilename := filepath.Join(tmp, "humans.txt")
+		err = ioutil.WriteFile(humansDataFilename, humansData, 0666)
+		if err != nil {
+			t.Fatal(err)
+		}
+
+		humansManifestHash := runSwarmExpectHash(t,
+			"--bzzapi",
+			cluster.Nodes[0].URL,
+			"up",
+			humansDataFilename,
+		)
+
+		newManifestHash := runSwarmExpectHash(t,
+			"--bzzapi",
+			cluster.Nodes[0].URL,
+			"manifest",
+			"add",
+			origManifestHash,
+			"humans.txt",
+			humansManifestHash,
+		)
+
+		checkHashLength(t, newManifestHash, encrypt)
+
+		newManifest := downloadManifest(t, client, newManifestHash, encrypt)
+
+		var found bool
+		for _, e := range newManifest.Entries {
+			if e.Path == "humans.txt" {
+				found = true
+				if e.Size != int64(len(humansData)) {
+					t.Errorf("expected humans.txt size %v, got %v", len(humansData), e.Size)
+				}
+				if e.ModTime.IsZero() {
+					t.Errorf("got zero mod time for humans.txt")
+				}
+				ct := "text/plain; charset=utf-8"
+				if e.ContentType != ct {
+					t.Errorf("expected content type %q, got %q", ct, e.ContentType)
+				}
+				break
+			}
+		}
+		if !found {
+			t.Fatal("no humans.txt in new manifest")
+		}
+
+		checkFile(t, client, newManifestHash, "humans.txt", humansData)
+	})
+
+	// upload a new file and use its manifest to add it the original manifest,
+	// but ensure that the file will be in the nested manifest of the original one.
+	t.Run("add nested", func(t *testing.T) {
+		robotsData := []byte(`{"disallow": "/"}`)
+		robotsDataFilename := filepath.Join(tmp, "robots.json")
+		err = ioutil.WriteFile(robotsDataFilename, robotsData, 0666)
+		if err != nil {
+			t.Fatal(err)
+		}
+
+		robotsManifestHash := runSwarmExpectHash(t,
+			"--bzzapi",
+			cluster.Nodes[0].URL,
+			"up",
+			robotsDataFilename,
+		)
+
+		newManifestHash := runSwarmExpectHash(t,
+			"--bzzapi",
+			cluster.Nodes[0].URL,
+			"manifest",
+			"add",
+			origManifestHash,
+			"robots.json",
+			robotsManifestHash,
+		)
+
+		checkHashLength(t, newManifestHash, encrypt)
+
+		newManifest := downloadManifest(t, client, newManifestHash, encrypt)
+
+		var found bool
+	loop:
+		for _, e := range newManifest.Entries {
+			if e.Path == "robots." {
+				nestedManifest := downloadManifest(t, client, e.Hash, encrypt)
+				for _, e := range nestedManifest.Entries {
+					if e.Path == "json" {
+						found = true
+						if e.Size != int64(len(robotsData)) {
+							t.Errorf("expected robots.json size %v, got %v", len(robotsData), e.Size)
+						}
+						if e.ModTime.IsZero() {
+							t.Errorf("got zero mod time for robots.json")
+						}
+						ct := "application/json"
+						if e.ContentType != ct {
+							t.Errorf("expected content type %q, got %q", ct, e.ContentType)
+						}
+						break loop
+					}
+				}
+			}
+		}
+		if !found {
+			t.Fatal("no robots.json in new manifest")
+		}
+
+		checkFile(t, client, newManifestHash, "robots.json", robotsData)
+	})
+
+	// upload a new file and use its manifest to change the file it the original manifest.
+	t.Run("update", func(t *testing.T) {
+		indexData := []byte("<h1>Ethereum Swarm</h1>")
+		indexDataFilename := filepath.Join(tmp, "index.html")
+		err = ioutil.WriteFile(indexDataFilename, indexData, 0666)
+		if err != nil {
+			t.Fatal(err)
+		}
+
+		indexManifestHash := runSwarmExpectHash(t,
+			"--bzzapi",
+			cluster.Nodes[0].URL,
+			"up",
+			indexDataFilename,
+		)
+
+		newManifestHash := runSwarmExpectHash(t,
+			"--bzzapi",
+			cluster.Nodes[0].URL,
+			"manifest",
+			"update",
+			origManifestHash,
+			"index.html",
+			indexManifestHash,
+		)
+
+		checkHashLength(t, newManifestHash, encrypt)
+
+		newManifest := downloadManifest(t, client, newManifestHash, encrypt)
+
+		var found bool
+		for _, e := range newManifest.Entries {
+			if e.Path == "index.html" {
+				found = true
+				if e.Size != int64(len(indexData)) {
+					t.Errorf("expected index.html size %v, got %v", len(indexData), e.Size)
+				}
+				if e.ModTime.IsZero() {
+					t.Errorf("got zero mod time for index.html")
+				}
+				ct := "text/html; charset=utf-8"
+				if e.ContentType != ct {
+					t.Errorf("expected content type %q, got %q", ct, e.ContentType)
+				}
+				break
+			}
+		}
+		if !found {
+			t.Fatal("no index.html in new manifest")
+		}
+
+		checkFile(t, client, newManifestHash, "index.html", indexData)
+
+		// check default entry change
+		checkFile(t, client, newManifestHash, "", indexData)
+	})
+
+	// upload a new file and use its manifest to change the file it the original manifest,
+	// but ensure that the file is in the nested manifest of the original one.
+	t.Run("update nested", func(t *testing.T) {
+		robotsData := []byte(`<string>Only humans allowed!!!</strong>`)
+		robotsDataFilename := filepath.Join(tmp, "robots.html")
+		err = ioutil.WriteFile(robotsDataFilename, robotsData, 0666)
+		if err != nil {
+			t.Fatal(err)
+		}
+
+		humansManifestHash := runSwarmExpectHash(t,
+			"--bzzapi",
+			cluster.Nodes[0].URL,
+			"up",
+			robotsDataFilename,
+		)
+
+		newManifestHash := runSwarmExpectHash(t,
+			"--bzzapi",
+			cluster.Nodes[0].URL,
+			"manifest",
+			"update",
+			origManifestHash,
+			"robots.html",
+			humansManifestHash,
+		)
+
+		checkHashLength(t, newManifestHash, encrypt)
+
+		newManifest := downloadManifest(t, client, newManifestHash, encrypt)
+
+		var found bool
+	loop:
+		for _, e := range newManifest.Entries {
+			if e.Path == "robots." {
+				nestedManifest := downloadManifest(t, client, e.Hash, encrypt)
+				for _, e := range nestedManifest.Entries {
+					if e.Path == "html" {
+						found = true
+						if e.Size != int64(len(robotsData)) {
+							t.Errorf("expected robots.html size %v, got %v", len(robotsData), e.Size)
+						}
+						if e.ModTime.IsZero() {
+							t.Errorf("got zero mod time for robots.html")
+						}
+						ct := "text/html; charset=utf-8"
+						if e.ContentType != ct {
+							t.Errorf("expected content type %q, got %q", ct, e.ContentType)
+						}
+						break loop
+					}
+				}
+			}
+		}
+		if !found {
+			t.Fatal("no robots.html in new manifest")
+		}
+
+		checkFile(t, client, newManifestHash, "robots.html", robotsData)
+	})
+
+	// remove a file from the manifest.
+	t.Run("remove", func(t *testing.T) {
+		newManifestHash := runSwarmExpectHash(t,
+			"--bzzapi",
+			cluster.Nodes[0].URL,
+			"manifest",
+			"remove",
+			origManifestHash,
+			"mutants.txt",
+		)
+
+		checkHashLength(t, newManifestHash, encrypt)
+
+		newManifest := downloadManifest(t, client, newManifestHash, encrypt)
+
+		var found bool
+		for _, e := range newManifest.Entries {
+			if e.Path == "mutants.txt" {
+				found = true
+				break
+			}
+		}
+		if found {
+			t.Fatal("mutants.txt is not removed")
+		}
+	})
+
+	// remove a file from the manifest, but ensure that the file is in
+	// the nested manifest of the original one.
+	t.Run("remove nested", func(t *testing.T) {
+		newManifestHash := runSwarmExpectHash(t,
+			"--bzzapi",
+			cluster.Nodes[0].URL,
+			"manifest",
+			"remove",
+			origManifestHash,
+			"robots.html",
+		)
+
+		checkHashLength(t, newManifestHash, encrypt)
+
+		newManifest := downloadManifest(t, client, newManifestHash, encrypt)
+
+		var found bool
+	loop:
+		for _, e := range newManifest.Entries {
+			if e.Path == "robots." {
+				nestedManifest := downloadManifest(t, client, e.Hash, encrypt)
+				for _, e := range nestedManifest.Entries {
+					if e.Path == "html" {
+						found = true
+						break loop
+					}
+				}
+			}
+		}
+		if found {
+			t.Fatal("robots.html in not removed")
+		}
+	})
+}
+
+// TestNestedDefaultEntryUpdate tests if the default entry is updated
+// if the file in nested manifest used for it is also updated.
+func TestNestedDefaultEntryUpdate(t *testing.T) {
+	testNestedDefaultEntryUpdate(t, false)
+}
+
+// TestNestedDefaultEntryUpdateEncrypted tests if the default entry
+// of encrypted upload is updated if the file in nested manifest
+// used for it is also updated.
+func TestNestedDefaultEntryUpdateEncrypted(t *testing.T) {
+	testNestedDefaultEntryUpdate(t, true)
+}
+
+func testNestedDefaultEntryUpdate(t *testing.T, encrypt bool) {
+	t.Parallel()
+	cluster := newTestCluster(t, 1)
+	defer cluster.Shutdown()
+
+	tmp, err := ioutil.TempDir("", "swarm-manifest-test")
+	if err != nil {
+		t.Fatal(err)
+	}
+	defer os.RemoveAll(tmp)
+
+	origDir := filepath.Join(tmp, "orig")
+	if err := os.Mkdir(origDir, 0777); err != nil {
+		t.Fatal(err)
+	}
+
+	indexData := []byte("<h1>Test</h1>")
+	indexDataFilename := filepath.Join(origDir, "index.html")
+	err = ioutil.WriteFile(indexDataFilename, indexData, 0666)
+	if err != nil {
+		t.Fatal(err)
+	}
+	// Add another file with common prefix as the default entry to test updates of
+	// default entry with nested manifests.
+	err = ioutil.WriteFile(filepath.Join(origDir, "index.txt"), []byte("Test"), 0666)
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	args := []string{
+		"--bzzapi",
+		cluster.Nodes[0].URL,
+		"--recursive",
+		"--defaultpath",
+		indexDataFilename,
+		"up",
+		origDir,
+	}
+	if encrypt {
+		args = append(args, "--encrypt")
+	}
+
+	origManifestHash := runSwarmExpectHash(t, args...)
+
+	checkHashLength(t, origManifestHash, encrypt)
+
+	client := swarm.NewClient(cluster.Nodes[0].URL)
+
+	newIndexData := []byte("<h1>Ethereum Swarm</h1>")
+	newIndexDataFilename := filepath.Join(tmp, "index.html")
+	err = ioutil.WriteFile(newIndexDataFilename, newIndexData, 0666)
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	newIndexManifestHash := runSwarmExpectHash(t,
+		"--bzzapi",
+		cluster.Nodes[0].URL,
+		"up",
+		newIndexDataFilename,
+	)
+
+	newManifestHash := runSwarmExpectHash(t,
+		"--bzzapi",
+		cluster.Nodes[0].URL,
+		"manifest",
+		"update",
+		origManifestHash,
+		"index.html",
+		newIndexManifestHash,
+	)
+
+	checkHashLength(t, newManifestHash, encrypt)
+
+	newManifest := downloadManifest(t, client, newManifestHash, encrypt)
+
+	var found bool
+	for _, e := range newManifest.Entries {
+		if e.Path == "index." {
+			found = true
+			newManifest = downloadManifest(t, client, e.Hash, encrypt)
+			break
+		}
+	}
+	if !found {
+		t.Fatal("no index. path in new manifest")
+	}
+
+	found = false
+	for _, e := range newManifest.Entries {
+		if e.Path == "html" {
+			found = true
+			if e.Size != int64(len(newIndexData)) {
+				t.Errorf("expected index.html size %v, got %v", len(newIndexData), e.Size)
+			}
+			if e.ModTime.IsZero() {
+				t.Errorf("got zero mod time for index.html")
+			}
+			ct := "text/html; charset=utf-8"
+			if e.ContentType != ct {
+				t.Errorf("expected content type %q, got %q", ct, e.ContentType)
+			}
+			break
+		}
+	}
+	if !found {
+		t.Fatal("no html in new manifest")
+	}
+
+	checkFile(t, client, newManifestHash, "index.html", newIndexData)
+
+	// check default entry change
+	checkFile(t, client, newManifestHash, "", newIndexData)
+}
+
+func runSwarmExpectHash(t *testing.T, args ...string) (hash string) {
+	t.Helper()
+	hashRegexp := `[a-f\d]{64,128}`
+	up := runSwarm(t, args...)
+	_, matches := up.ExpectRegexp(hashRegexp)
+	up.ExpectExit()
+
+	if len(matches) < 1 {
+		t.Fatal("no matches found")
+	}
+	return matches[0]
+}
+
+func checkHashLength(t *testing.T, hash string, encrypted bool) {
+	t.Helper()
+	l := len(hash)
+	if encrypted && l != 128 {
+		t.Errorf("expected hash length 128, got %v", l)
+	}
+	if !encrypted && l != 64 {
+		t.Errorf("expected hash length 64, got %v", l)
+	}
+}
+
+func downloadManifest(t *testing.T, client *swarm.Client, hash string, encrypted bool) (manifest *api.Manifest) {
+	t.Helper()
+	m, isEncrypted, err := client.DownloadManifest(hash)
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	if encrypted != isEncrypted {
+		t.Error("new manifest encryption flag is not correct")
+	}
+	return m
+}
+
+func checkFile(t *testing.T, client *swarm.Client, hash, path string, expected []byte) {
+	t.Helper()
+	f, err := client.Download(hash, path)
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	got, err := ioutil.ReadAll(f)
+	if err != nil {
+		t.Fatal(err)
+	}
+	if !bytes.Equal(got, expected) {
+		t.Errorf("expected file content %q, got %q", expected, got)
+	}
+}
diff --git a/cmd/swarm/upload.go b/cmd/swarm/upload.go
index 8ba0e7c5f0..9eae2a3f80 100644
--- a/cmd/swarm/upload.go
+++ b/cmd/swarm/upload.go
@@ -98,6 +98,17 @@ func upload(ctx *cli.Context) {
 			if !recursive {
 				return "", errors.New("Argument is a directory and recursive upload is disabled")
 			}
+			if defaultPath != "" {
+				// construct absolute default path
+				absDefaultPath, _ := filepath.Abs(defaultPath)
+				absFile, _ := filepath.Abs(file)
+				// make sure absolute directory ends with only one "/"
+				// to trim it from absolute default path and get relative default path
+				absFile = strings.TrimRight(absFile, "/") + "/"
+				if absDefaultPath != "" && absFile != "" && strings.HasPrefix(absDefaultPath, absFile) {
+					defaultPath = strings.TrimPrefix(absDefaultPath, absFile)
+				}
+			}
 			return client.UploadDirectory(file, defaultPath, "", toEncrypt)
 		}
 	} else {
diff --git a/cmd/swarm/upload_test.go b/cmd/swarm/upload_test.go
index 2afc9b3a11..c3199dadc6 100644
--- a/cmd/swarm/upload_test.go
+++ b/cmd/swarm/upload_test.go
@@ -273,3 +273,84 @@ func testCLISwarmUpRecursive(toEncrypt bool, t *testing.T) {
 		}
 	}
 }
+
+// TestCLISwarmUpDefaultPath tests swarm recursive upload with relative and absolute
+// default paths and with encryption.
+func TestCLISwarmUpDefaultPath(t *testing.T) {
+	testCLISwarmUpDefaultPath(false, false, t)
+	testCLISwarmUpDefaultPath(false, true, t)
+	testCLISwarmUpDefaultPath(true, false, t)
+	testCLISwarmUpDefaultPath(true, true, t)
+}
+
+func testCLISwarmUpDefaultPath(toEncrypt bool, absDefaultPath bool, t *testing.T) {
+	cluster := newTestCluster(t, 1)
+	defer cluster.Shutdown()
+
+	tmp, err := ioutil.TempDir("", "swarm-defaultpath-test")
+	if err != nil {
+		t.Fatal(err)
+	}
+	defer os.RemoveAll(tmp)
+
+	err = ioutil.WriteFile(filepath.Join(tmp, "index.html"), []byte("<h1>Test</h1>"), 0666)
+	if err != nil {
+		t.Fatal(err)
+	}
+	err = ioutil.WriteFile(filepath.Join(tmp, "robots.txt"), []byte("Disallow: /"), 0666)
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	defaultPath := "index.html"
+	if absDefaultPath {
+		defaultPath = filepath.Join(tmp, defaultPath)
+	}
+
+	args := []string{
+		"--bzzapi",
+		cluster.Nodes[0].URL,
+		"--recursive",
+		"--defaultpath",
+		defaultPath,
+		"up",
+		tmp,
+	}
+	if toEncrypt {
+		args = append(args, "--encrypt")
+	}
+
+	up := runSwarm(t, args...)
+	hashRegexp := `[a-f\d]{64,128}`
+	_, matches := up.ExpectRegexp(hashRegexp)
+	up.ExpectExit()
+	hash := matches[0]
+
+	client := swarm.NewClient(cluster.Nodes[0].URL)
+
+	m, isEncrypted, err := client.DownloadManifest(hash)
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	if toEncrypt != isEncrypted {
+		t.Error("downloaded manifest is not encrypted")
+	}
+
+	var found bool
+	var entriesCount int
+	for _, e := range m.Entries {
+		entriesCount++
+		if e.Path == "" {
+			found = true
+		}
+	}
+
+	if !found {
+		t.Error("manifest default entry was not found")
+	}
+
+	if entriesCount != 3 {
+		t.Errorf("manifest contains %v entries, expected %v", entriesCount, 3)
+	}
+}
diff --git a/swarm/api/api.go b/swarm/api/api.go
index b418c45e1c..99d971b105 100644
--- a/swarm/api/api.go
+++ b/swarm/api/api.go
@@ -704,11 +704,12 @@ func (a *API) AddFile(ctx context.Context, mhash, path, fname string, content []
 	return fkey, newMkey.String(), nil
 }
 
-func (a *API) UploadTar(ctx context.Context, bodyReader io.ReadCloser, manifestPath string, mw *ManifestWriter) (storage.Address, error) {
+func (a *API) UploadTar(ctx context.Context, bodyReader io.ReadCloser, manifestPath, defaultPath string, mw *ManifestWriter) (storage.Address, error) {
 	apiUploadTarCount.Inc(1)
 	var contentKey storage.Address
 	tr := tar.NewReader(bodyReader)
 	defer bodyReader.Close()
+	var defaultPathFound bool
 	for {
 		hdr, err := tr.Next()
 		if err == io.EOF {
@@ -737,6 +738,25 @@ func (a *API) UploadTar(ctx context.Context, bodyReader io.ReadCloser, manifestP
 			apiUploadTarFail.Inc(1)
 			return nil, fmt.Errorf("error adding manifest entry from tar stream: %s", err)
 		}
+		if hdr.Name == defaultPath {
+			entry := &ManifestEntry{
+				Hash:        contentKey.Hex(),
+				Path:        "", // default entry
+				ContentType: hdr.Xattrs["user.swarm.content-type"],
+				Mode:        hdr.Mode,
+				Size:        hdr.Size,
+				ModTime:     hdr.ModTime,
+			}
+			contentKey, err = mw.AddEntry(ctx, nil, entry)
+			if err != nil {
+				apiUploadTarFail.Inc(1)
+				return nil, fmt.Errorf("error adding default manifest entry from tar stream: %s", err)
+			}
+			defaultPathFound = true
+		}
+	}
+	if defaultPath != "" && !defaultPathFound {
+		return contentKey, fmt.Errorf("default path %q not found", defaultPath)
 	}
 	return contentKey, nil
 }
diff --git a/swarm/api/client/client.go b/swarm/api/client/client.go
index b3a5e929d0..8a9efe3608 100644
--- a/swarm/api/client/client.go
+++ b/swarm/api/client/client.go
@@ -138,7 +138,7 @@ func (c *Client) Upload(file *File, manifest string, toEncrypt bool) (string, er
 	if file.Size <= 0 {
 		return "", errors.New("file size must be greater than zero")
 	}
-	return c.TarUpload(manifest, &FileUploader{file}, toEncrypt)
+	return c.TarUpload(manifest, &FileUploader{file}, "", toEncrypt)
 }
 
 // Download downloads a file with the given path from the swarm manifest with
@@ -175,7 +175,15 @@ func (c *Client) UploadDirectory(dir, defaultPath, manifest string, toEncrypt bo
 	} else if !stat.IsDir() {
 		return "", fmt.Errorf("not a directory: %s", dir)
 	}
-	return c.TarUpload(manifest, &DirectoryUploader{dir, defaultPath}, toEncrypt)
+	if defaultPath != "" {
+		if _, err := os.Stat(filepath.Join(dir, defaultPath)); err != nil {
+			if os.IsNotExist(err) {
+				return "", fmt.Errorf("the default path %q was not found in the upload directory %q", defaultPath, dir)
+			}
+			return "", fmt.Errorf("default path: %v", err)
+		}
+	}
+	return c.TarUpload(manifest, &DirectoryUploader{dir}, defaultPath, toEncrypt)
 }
 
 // DownloadDirectory downloads the files contained in a swarm manifest under
@@ -389,21 +397,11 @@ func (u UploaderFunc) Upload(upload UploadFn) error {
 // DirectoryUploader uploads all files in a directory, optionally uploading
 // a file to the default path
 type DirectoryUploader struct {
-	Dir         string
-	DefaultPath string
+	Dir string
 }
 
 // Upload performs the upload of the directory and default path
 func (d *DirectoryUploader) Upload(upload UploadFn) error {
-	if d.DefaultPath != "" {
-		file, err := Open(d.DefaultPath)
-		if err != nil {
-			return err
-		}
-		if err := upload(file); err != nil {
-			return err
-		}
-	}
 	return filepath.Walk(d.Dir, func(path string, f os.FileInfo, err error) error {
 		if err != nil {
 			return err
@@ -441,7 +439,7 @@ type UploadFn func(file *File) error
 
 // TarUpload uses the given Uploader to upload files to swarm as a tar stream,
 // returning the resulting manifest hash
-func (c *Client) TarUpload(hash string, uploader Uploader, toEncrypt bool) (string, error) {
+func (c *Client) TarUpload(hash string, uploader Uploader, defaultPath string, toEncrypt bool) (string, error) {
 	reqR, reqW := io.Pipe()
 	defer reqR.Close()
 	addr := hash
@@ -458,6 +456,11 @@ func (c *Client) TarUpload(hash string, uploader Uploader, toEncrypt bool) (stri
 		return "", err
 	}
 	req.Header.Set("Content-Type", "application/x-tar")
+	if defaultPath != "" {
+		q := req.URL.Query()
+		q.Set("defaultpath", defaultPath)
+		req.URL.RawQuery = q.Encode()
+	}
 
 	// use 'Expect: 100-continue' so we don't send the request body if
 	// the server refuses the request
diff --git a/swarm/api/client/client_test.go b/swarm/api/client/client_test.go
index dc608e3f1f..ae82a91d79 100644
--- a/swarm/api/client/client_test.go
+++ b/swarm/api/client/client_test.go
@@ -194,7 +194,7 @@ func TestClientUploadDownloadDirectory(t *testing.T) {
 
 	// upload the directory
 	client := NewClient(srv.URL)
-	defaultPath := filepath.Join(dir, testDirFiles[0])
+	defaultPath := testDirFiles[0]
 	hash, err := client.UploadDirectory(dir, defaultPath, "", false)
 	if err != nil {
 		t.Fatalf("error uploading directory: %s", err)
diff --git a/swarm/api/http/server.go b/swarm/api/http/server.go
index bd6949de6c..5a5c42adc0 100644
--- a/swarm/api/http/server.go
+++ b/swarm/api/http/server.go
@@ -336,7 +336,9 @@ func (s *Server) HandlePostFiles(w http.ResponseWriter, r *http.Request) {
 func (s *Server) handleTarUpload(r *http.Request, mw *api.ManifestWriter) (storage.Address, error) {
 	log.Debug("handle.tar.upload", "ruid", GetRUID(r.Context()))
 
-	key, err := s.api.UploadTar(r.Context(), r.Body, GetURI(r.Context()).Path, mw)
+	defaultPath := r.URL.Query().Get("defaultpath")
+
+	key, err := s.api.UploadTar(r.Context(), r.Body, GetURI(r.Context()).Path, defaultPath, mw)
 	if err != nil {
 		return nil, err
 	}
diff --git a/swarm/api/manifest.go b/swarm/api/manifest.go
index fbd143f295..2a163dd39c 100644
--- a/swarm/api/manifest.go
+++ b/swarm/api/manifest.go
@@ -106,13 +106,18 @@ func (a *API) NewManifestWriter(ctx context.Context, addr storage.Address, quitC
 }
 
 // AddEntry stores the given data and adds the resulting key to the manifest
-func (m *ManifestWriter) AddEntry(ctx context.Context, data io.Reader, e *ManifestEntry) (storage.Address, error) {
-	key, _, err := m.api.Store(ctx, data, e.Size, m.trie.encrypted)
-	if err != nil {
-		return nil, err
-	}
+func (m *ManifestWriter) AddEntry(ctx context.Context, data io.Reader, e *ManifestEntry) (key storage.Address, err error) {
 	entry := newManifestTrieEntry(e, nil)
-	entry.Hash = key.Hex()
+	if data != nil {
+		key, _, err = m.api.Store(ctx, data, e.Size, m.trie.encrypted)
+		if err != nil {
+			return nil, err
+		}
+		entry.Hash = key.Hex()
+	}
+	if entry.Hash == "" {
+		return key, errors.New("missing entry hash")
+	}
 	m.trie.addEntry(entry, m.quitC)
 	return key, nil
 }