diff --git a/packages/livedata/client_convenience.js b/packages/livedata/client_convenience.js
index b6992d1ac7..5838ab1e2d 100644
--- a/packages/livedata/client_convenience.js
+++ b/packages/livedata/client_convenience.js
@@ -11,8 +11,38 @@ if (Meteor.isClient) {
     if (__meteor_runtime_config__.DDP_DEFAULT_CONNECTION_URL)
       ddpUrl = __meteor_runtime_config__.DDP_DEFAULT_CONNECTION_URL;
   }
+
+  var negotiationFailuresKey = "Meteor.DDPVersionNegotiationFailures";
+
+  var onConnected = function () {
+    Meteor._localStorage.removeItem(negotiationFailuresKey);
+  };
+
+  var exponentialBackoff = function (failures) {
+    return Math.pow(failures, 1.5) * 1000;
+  };
+
+  var onDDPVersionNegotiationFailure = function (serverRequestedVersion) {
+    if (Package.reload) {
+      var failures = parseInt(Meteor._localStorage.getItem(negotiationFailuresKey) || "0") + 1;
+      Meteor._localStorage.setItem(negotiationFailuresKey, "" + failures);
+      Meteor.setTimeout(
+        function () {
+          Package.reload.Reload._reload();
+        },
+        exponentialBackoff(failures)
+      );
+    }
+    else {
+      Meteor._debug("DDP version negotiation failed; server requested version " + serverRequestedVersion);
+    }
+  };
+
   Meteor.connection =
-    DDP.connect(ddpUrl, true /* restart_on_update */);
+    DDP.connect(ddpUrl, {
+      onConnected: onConnected,
+      onDDPVersionNegotiationFailure: onDDPVersionNegotiationFailure
+    });
 
   // Proxy the public methods of Meteor.connection so they can
   // be called directly on Meteor.
diff --git a/packages/livedata/livedata_connection.js b/packages/livedata/livedata_connection.js
index f71db523bc..fd62c5c5a1 100644
--- a/packages/livedata/livedata_connection.js
+++ b/packages/livedata/livedata_connection.js
@@ -8,16 +8,17 @@ if (Meteor.isServer) {
 //   or an object as a test hook (see code)
 // Options:
 //   reloadWithOutstanding: is it OK to reload if there are outstanding methods?
+//   onDDPNegotiationVersionFailure: callback with the server requested version.
 var Connection = function (url, options) {
   var self = this;
   options = _.extend({
+    onConnected: function () {},
+    onDDPVersionNegotiationFailure: function (serverRequestedVersion, error) {
+      Meteor._debug("Failed DDP connection: " + error);
+    },
     // These options are only for testing.
     reloadWithOutstanding: false,
-    supportedDDPVersions: SUPPORTED_DDP_VERSIONS,
-    onConnectionFailure: function (reason) {
-      Meteor._debug("Failed DDP connection: " + reason);
-    },
-    onConnected: function () {}
+    supportedDDPVersions: SUPPORTED_DDP_VERSIONS
   }, options);
 
   // If set, called when we reconnect, queuing method calls _before_ the
@@ -197,7 +198,7 @@ var Connection = function (url, options) {
         var error =
               "Version negotiation failed; server requested version " + msg.version;
         self._stream.disconnect({_permanent: true, _error: error});
-        options.onConnectionFailure(error);
+        options.onDDPVersionNegotiationFailure(msg.version, error);
       }
     }
     else if (_.include(['added', 'changed', 'removed', 'ready', 'updated'], msg.msg))
@@ -1378,8 +1379,8 @@ LivedataTest.Connection = Connection;
 //     "/",
 //     "ddp+sockjs://ddp--****-foo.meteor.com/sockjs"
 //
-DDP.connect = function (url) {
-  var ret = new Connection(url);
+DDP.connect = function (url, options) {
+  var ret = new Connection(url, options);
   allConnections.push(ret); // hack. see below.
   return ret;
 };
diff --git a/packages/livedata/package.js b/packages/livedata/package.js
index f0f7a7e5b2..d8c01f2cab 100644
--- a/packages/livedata/package.js
+++ b/packages/livedata/package.js
@@ -25,6 +25,8 @@ Package.on_use(function (api) {
   // If the facts package is loaded, publish some statistics.
   api.use('facts', 'server', {weak: true});
 
+  api.use('localstorage', 'client');
+
   api.export('DDP');
   api.export('DDPServer', 'server');