diff --git a/src/diff.c b/src/diff.c
index cf09140..92648a3 100644
--- a/src/diff.c
+++ b/src/diff.c
@@ -1138,21 +1138,36 @@
 # endif
 
     wp->w_p_diff = TRUE;
+
     /* Use 'scrollbind' and 'cursorbind' when available */
 #ifdef FEAT_SCROLLBIND
+    if (!wp->w_p_diff_saved)
+	wp->w_p_scb_save = wp->w_p_scb;
     wp->w_p_scb = TRUE;
 #endif
 #ifdef FEAT_CURSORBIND
+    if (!wp->w_p_diff_saved)
+	wp->w_p_crb_save = wp->w_p_crb;
     wp->w_p_crb = TRUE;
 #endif
+    if (!wp->w_p_diff_saved)
+	wp->w_p_wrap_save = wp->w_p_wrap;
     wp->w_p_wrap = FALSE;
 # ifdef FEAT_FOLDING
     curwin = wp;
     curbuf = curwin->w_buffer;
+    if (!wp->w_p_diff_saved)
+	wp->w_p_fdm_save = vim_strsave(wp->w_p_fdm);
     set_string_option_direct((char_u *)"fdm", -1, (char_u *)"diff",
 						       OPT_LOCAL|OPT_FREE, 0);
     curwin = old_curwin;
     curbuf = curwin->w_buffer;
+    if (!wp->w_p_diff_saved)
+    {
+	wp->w_p_fdc_save = wp->w_p_fdc;
+	wp->w_p_fen_save = wp->w_p_fen;
+	wp->w_p_fdl_save = wp->w_p_fdl;
+    }
     wp->w_p_fdc = diff_foldcolumn;
     wp->w_p_fen = TRUE;
     wp->w_p_fdl = 0;
@@ -1164,6 +1179,8 @@
     if (vim_strchr(p_sbo, 'h') == NULL)
 	do_cmdline_cmd((char_u *)"set sbo+=hor");
 #endif
+    /* Saved the current values, to be restored in ex_diffoff(). */
+    wp->w_p_diff_saved = TRUE;
 
     if (addbuf)
 	diff_buf_add(wp->w_buffer);
@@ -1188,25 +1205,48 @@
     {
 	if (wp == curwin || (eap->forceit && wp->w_p_diff))
 	{
-	    /* Set 'diff', 'scrollbind' off and 'wrap' on. */
+	    /* Set 'diff', 'scrollbind' off and 'wrap' on. If option values
+	     * were saved in diff_win_options() restore them. */
 	    wp->w_p_diff = FALSE;
-	    RESET_BINDING(wp);
-	    wp->w_p_wrap = TRUE;
+
+#ifdef FEAT_SCROLLBIND
+	    if (wp->w_p_scb)
+		wp->w_p_scb = wp->w_p_diff_saved ? wp->w_p_scb_save : FALSE;
+#endif
+#ifdef FEAT_CURSORBIND
+	    if (wp->w_p_crb)
+		wp->w_p_crb = wp->w_p_diff_saved ? wp->w_p_crb_save : FALSE;
+#endif
+	    if (!wp->w_p_wrap)
+		wp->w_p_wrap = wp->w_p_diff_saved ? wp->w_p_wrap_save : TRUE;
 #ifdef FEAT_FOLDING
 	    curwin = wp;
 	    curbuf = curwin->w_buffer;
-	    set_string_option_direct((char_u *)"fdm", -1,
+	    if (wp->w_p_diff_saved)
+	    {
+		free_string_option(wp->w_p_fdm);
+		wp->w_p_fdm = wp->w_p_fdm_save;
+		wp->w_p_fdm_save = empty_option;
+	    }
+	    else
+		set_string_option_direct((char_u *)"fdm", -1,
 				   (char_u *)"manual", OPT_LOCAL|OPT_FREE, 0);
 	    curwin = old_curwin;
 	    curbuf = curwin->w_buffer;
-	    wp->w_p_fdc = 0;
-	    wp->w_p_fen = FALSE;
-	    wp->w_p_fdl = 0;
+	    if (wp->w_p_fdc == diff_foldcolumn)
+		wp->w_p_fdc = wp->w_p_diff_saved ? wp->w_p_fdc_save : 0;
+	    if (wp->w_p_fen)
+		wp->w_p_fen = wp->w_p_diff_saved ? wp->w_p_fen_save : FALSE;
+	    if (wp->w_p_fdl == 0 && wp->w_p_diff_saved)
+		wp->w_p_fdl = wp->w_p_fdl_save;
 	    foldUpdateAll(wp);
 	    /* make sure topline is not halfway a fold */
 	    changed_window_setting_win(wp);
 #endif
+	    /* Note: 'sbo' is not restored, it's a global option. */
 	    diff_buf_adjust(wp);
+
+	    wp->w_p_diff_saved = FALSE;
 	}
 #ifdef FEAT_SCROLLBIND
 	diffwin |= wp->w_p_diff;
diff --git a/src/option.c b/src/option.c
index 8911b01..e91ef5d 100644
--- a/src/option.c
+++ b/src/option.c
@@ -10118,14 +10118,19 @@
     to->wo_stl = vim_strsave(from->wo_stl);
 #endif
     to->wo_wrap = from->wo_wrap;
+#ifdef FEAT_DIFF
+    to->wo_wrap_save = from->wo_wrap_save;
+#endif
 #ifdef FEAT_LINEBREAK
     to->wo_lbr = from->wo_lbr;
 #endif
 #ifdef FEAT_SCROLLBIND
     to->wo_scb = from->wo_scb;
+    to->wo_scb_save = from->wo_scb_save;
 #endif
 #ifdef FEAT_CURSORBIND
     to->wo_crb = from->wo_crb;
+    to->wo_crb_save = from->wo_crb_save;
 #endif
 #ifdef FEAT_SPELL
     to->wo_spell = from->wo_spell;
@@ -10137,6 +10142,7 @@
 #endif
 #ifdef FEAT_DIFF
     to->wo_diff = from->wo_diff;
+    to->wo_diff_saved = from->wo_diff_saved;
 #endif
 #ifdef FEAT_CONCEAL
     to->wo_cocu = vim_strsave(from->wo_cocu);
@@ -10144,11 +10150,16 @@
 #endif
 #ifdef FEAT_FOLDING
     to->wo_fdc = from->wo_fdc;
+    to->wo_fdc_save = from->wo_fdc_save;
     to->wo_fen = from->wo_fen;
+    to->wo_fen_save = from->wo_fen_save;
     to->wo_fdi = vim_strsave(from->wo_fdi);
     to->wo_fml = from->wo_fml;
     to->wo_fdl = from->wo_fdl;
+    to->wo_fdl_save = from->wo_fdl_save;
     to->wo_fdm = vim_strsave(from->wo_fdm);
+    to->wo_fdm_save = from->wo_diff_saved
+			      ? vim_strsave(from->wo_fdm_save) : empty_option;
     to->wo_fdn = from->wo_fdn;
 # ifdef FEAT_EVAL
     to->wo_fde = vim_strsave(from->wo_fde);
@@ -10180,6 +10191,7 @@
 #ifdef FEAT_FOLDING
     check_string_option(&wop->wo_fdi);
     check_string_option(&wop->wo_fdm);
+    check_string_option(&wop->wo_fdm_save);
 # ifdef FEAT_EVAL
     check_string_option(&wop->wo_fde);
     check_string_option(&wop->wo_fdt);
@@ -10210,6 +10222,7 @@
 #ifdef FEAT_FOLDING
     clear_string_option(&wop->wo_fdi);
     clear_string_option(&wop->wo_fdm);
+    clear_string_option(&wop->wo_fdm_save);
 # ifdef FEAT_EVAL
     clear_string_option(&wop->wo_fde);
     clear_string_option(&wop->wo_fdt);
diff --git a/src/structs.h b/src/structs.h
index 1fc91dc..f74d218 100644
--- a/src/structs.h
+++ b/src/structs.h
@@ -141,14 +141,22 @@
 #ifdef FEAT_FOLDING
     long	wo_fdc;
 # define w_p_fdc w_onebuf_opt.wo_fdc	/* 'foldcolumn' */
+    int		wo_fdc_save;
+# define w_p_fdc_save w_onebuf_opt.wo_fdc_save	/* 'foldenable' saved for diff mode */
     int		wo_fen;
 # define w_p_fen w_onebuf_opt.wo_fen	/* 'foldenable' */
+    int		wo_fen_save;
+# define w_p_fen_save w_onebuf_opt.wo_fen_save	/* 'foldenable' saved for diff mode */
     char_u	*wo_fdi;
 # define w_p_fdi w_onebuf_opt.wo_fdi	/* 'foldignore' */
     long	wo_fdl;
 # define w_p_fdl w_onebuf_opt.wo_fdl	/* 'foldlevel' */
+    int		wo_fdl_save;
+# define w_p_fdl_save w_onebuf_opt.wo_fdl_save	/* 'foldlevel' state saved for diff mode */
     char_u	*wo_fdm;
 # define w_p_fdm w_onebuf_opt.wo_fdm	/* 'foldmethod' */
+    char_u	*wo_fdm_save;
+# define w_p_fdm_save w_onebuf_opt.wo_fdm_save	/* 'fdm' saved for diff mode */
     long	wo_fml;
 # define w_p_fml w_onebuf_opt.wo_fml	/* 'foldminlines' */
     long	wo_fdn;
@@ -213,9 +221,17 @@
 #ifdef FEAT_SCROLLBIND
     int		wo_scb;
 # define w_p_scb w_onebuf_opt.wo_scb	/* 'scrollbind' */
+    int		wo_diff_saved; /* options were saved for starting diff mode */
+# define w_p_diff_saved w_onebuf_opt.wo_diff_saved
+    int		wo_scb_save;	/* 'scrollbind' saved for diff mode*/
+# define w_p_scb_save w_onebuf_opt.wo_scb_save
 #endif
     int		wo_wrap;
 #define w_p_wrap w_onebuf_opt.wo_wrap	/* 'wrap' */
+#ifdef FEAT_DIFF
+    int		wo_wrap_save;	/* 'wrap' state saved for diff mode*/
+# define w_p_wrap_save w_onebuf_opt.wo_wrap_save
+#endif
 #ifdef FEAT_CONCEAL
     char_u	*wo_cocu;		/* 'concealcursor' */
 # define w_p_cocu w_onebuf_opt.wo_cocu
@@ -225,6 +241,8 @@
 #ifdef FEAT_CURSORBIND
     int		wo_crb;
 # define w_p_crb w_onebuf_opt.wo_crb	/* 'cursorbind' */
+    int		wo_crb_save;	/* 'cursorbind' state saved for diff mode*/
+# define w_p_crb_save w_onebuf_opt.wo_crb_save
 #endif
 
 #ifdef FEAT_EVAL
diff --git a/src/version.c b/src/version.c
index e03d81b..e4c6d50 100644
--- a/src/version.c
+++ b/src/version.c
@@ -729,6 +729,8 @@
 static int included_patches[] =
 {   /* Add new patch number below this line */
 /**/
+    1294,
+/**/
     1293,
 /**/
     1292,