--- ../tests/Zend/Application/_files/zf-10945-1.inc	(revision 0)
+++ ../tests/Zend/Application/_files/zf-10945-1.inc	(revision 0)
@@ -0,0 +1,5 @@
+<?php
+$config = array(
+    'config' => dirname(__FILE__) . '/zf-10945-2.inc',
+);
+return $config;
\ No newline at end of file

Property changes on: ../tests/Zend/Application/_files/zf-10945-1.inc
___________________________________________________________________
Added: svn:eol-style
   + native

Index: ../tests/Zend/Application/_files/zf-10945-2.inc
===================================================================
--- ../tests/Zend/Application/_files/zf-10945-2.inc	(revision 0)
+++ ../tests/Zend/Application/_files/zf-10945-2.inc	(revision 0)
@@ -0,0 +1,6 @@
+<?php
+$config = array(
+    'foo' => 'bar',
+    'config' => dirname(__FILE__) . '/zf-10945-1.inc',
+);
+return $config;

Property changes on: ../tests/Zend/Application/_files/zf-10945-2.inc
___________________________________________________________________
Added: svn:eol-style
   + native

Index: ../tests/Zend/Application/ApplicationTest.php
===================================================================
--- ../tests/Zend/Application/ApplicationTest.php	(revision 23633)
+++ ../tests/Zend/Application/ApplicationTest.php	(working copy)
@@ -333,7 +333,34 @@
         $application = new Zend_Application('testing', $config);
         $this->assertTrue($application->hasOption('foo'));
     }
+    
+    /**
+     * @group ZF-10945
+     */
+    public function testPassingStringShouldLoadEmbbededOptions()
+    {
+        $application = new Zend_Application('testing', dirname(__FILE__) . '/_files/zf-10945-1.inc');
+        $this->assertTrue($application->hasOption('foo'));
+    }
 
+     /**
+     * @group ZF-10945
+     */
+   	public function testPassingArrayWithConfigStringShouldLoadEmbbededOptions()
+    {
+        $application = new Zend_Application('testing', array('config' => dirname(__FILE__) . '/_files/zf-10945-1.inc'));
+        $this->assertTrue($application->hasOption('foo'));
+    }
+
+     /**
+     * @group ZF-10945
+     */
+   	public function testPassingArrayWithConfigArrayShouldLoadEmbbededOptions()
+    {
+        $application = new Zend_Application('testing', array('config' => array(dirname(__FILE__) . '/_files/zf-10945-1.inc')));
+        $this->assertTrue($application->hasOption('foo'));
+    }
+
     public function testPassingArrayOptionsToConstructorShouldLoadOptions()
     {
         $config = new Zend_Config_Ini(dirname(__FILE__) . '/_files/appconfig.ini', 'testing');
Index: ../library/Zend/Application.php
===================================================================
--- ../library/Zend/Application.php	(revision 23633)
+++ ../library/Zend/Application.php	(working copy)
@@ -82,7 +82,7 @@
 
         if (null !== $options) {
             if (is_string($options)) {
-                $options = $this->_loadConfig($options);
+                $options = array('config'=>$options);
             } elseif ($options instanceof Zend_Config) {
                 $options = $options->toArray();
             } elseif (!is_array($options)) {
@@ -124,16 +124,31 @@
     public function setOptions(array $options)
     {
         if (!empty($options['config'])) {
-            if (is_array($options['config'])) {
-                $_options = array();
-                foreach ($options['config'] as $tmp) {
-                    $_options = $this->mergeOptions($_options, $this->_loadConfig($tmp));
-                }
-                $options = $this->mergeOptions($_options, $options);
-            } else {
-                $options = $this->mergeOptions($this->_loadConfig($options['config']), $options);
+			$_configs = array(); // keep track of loaded configs files
+            while (isset($options['config'])) {
+            	$configProp = $options['config'];
+            	unset($options['config']);
+
+				if (is_array($configProp)) {
+					$_options = array();
+					foreach ($configProp as $tmp) {
+						if (!in_array($configProp, $_configs)) {
+							$_configs[] = $tmp;
+							$_options = $this->mergeOptions($_options, $this->_loadConfig($tmp));
+							
+						}
+					}
+					$options = $this->mergeOptions($_options, $options);
+				} else {
+					if (!in_array($configProp, $_configs)) {
+						$_configs[] = $configProp;
+						$options = $this->mergeOptions($this->_loadConfig($configProp), $options);
+					}
+				}
             }
-        }
+            
+            $options['config'] = $_configs;
+		}
 
         $this->_options = $options;