Index: daemon/gdm-display-access-file.c
===================================================================
--- daemon/gdm-display-access-file.c.orig	2010-03-18 08:27:16.000000000 +1100
+++ daemon/gdm-display-access-file.c	2010-05-11 07:44:22.000000000 +1000
@@ -440,11 +440,15 @@ _get_auth_info_for_display (GdmDisplayAc
         if (is_local) {
                 char localhost[HOST_NAME_MAX + 1] = "";
                 *family = FamilyLocal;
+#if 0
                 if (gethostname (localhost, HOST_NAME_MAX) == 0) {
                         *address = g_strdup (localhost);
                 } else {
+#endif
                         *address = g_strdup ("localhost");
+#if 0
                 }
+#endif
         } else {
                 *family = FamilyWild;
                 gdm_display_get_remote_hostname (display, address, NULL);
Index: daemon/gdm-session-direct.c
===================================================================
--- daemon/gdm-session-direct.c.orig	2010-05-11 07:44:20.000000000 +1000
+++ daemon/gdm-session-direct.c	2010-05-11 07:44:22.000000000 +1000
@@ -2075,6 +2075,12 @@ setup_session_environment (GdmSessionDir
                                                      g_getenv ("WINDOWPATH"));
 
 
+        if (session->priv->display_is_local) {
+                gdm_session_direct_set_environment_variable (session,
+                                                             "XAUTHLOCALHOSTNAME",
+                                                             "localhost");
+        }
+
         /* FIXME: We do this here and in the session worker.  We should consolidate
          * somehow.
          */
Index: daemon/gdm-slave.c
===================================================================
--- daemon/gdm-slave.c.orig	2010-04-27 23:48:54.000000000 +1000
+++ daemon/gdm-slave.c	2010-05-11 07:44:22.000000000 +1000
@@ -233,6 +233,10 @@ get_script_environment (GdmSlave   *slav
                 g_hash_table_insert (hash, g_strdup ("REMOTE_HOST"), g_strdup (slave->priv->display_hostname));
         }
 
+        if (slave->priv->display_is_local) {
+                g_hash_table_insert (hash, g_strdup ("XAUTHLOCALHOSTNAME"), g_strdup ("localhost"));
+        }
+
         /* Runs as root */
         g_hash_table_insert (hash, g_strdup ("XAUTHORITY"), g_strdup (slave->priv->display_x11_authority_file));
         g_hash_table_insert (hash, g_strdup ("DISPLAY"), g_strdup (slave->priv->display_name));
@@ -481,6 +485,7 @@ gdm_slave_connect_to_x11_display (GdmSla
 
         g_setenv ("DISPLAY", slave->priv->display_name, TRUE);
         g_setenv ("XAUTHORITY", slave->priv->display_x11_authority_file, TRUE);
+        g_setenv ("XAUTHLOCALHOSTNAME", "localhost", TRUE);
 
         sigemptyset (&mask);
         sigaddset (&mask, SIGCHLD);
Index: daemon/gdm-welcome-session.c
===================================================================
--- daemon/gdm-welcome-session.c.orig	2010-04-27 03:08:42.000000000 +1000
+++ daemon/gdm-welcome-session.c	2010-05-11 07:44:22.000000000 +1000
@@ -420,6 +420,10 @@ get_welcome_environment (GdmWelcomeSessi
                 g_hash_table_insert (hash, g_strdup ("SHELL"), g_strdup (pwent->pw_shell));
         }
 
+        if (welcome_session->priv->x11_display_is_local) {
+                g_hash_table_remove (hash, "XAUTHLOCALHOSTNAME");
+                g_hash_table_insert (hash, g_strdup ("XAUTHLOCALHOSTNAME"), g_strdup ("localhost"));
+        }
 
         g_hash_table_insert (hash, g_strdup ("PATH"), g_strdup (g_getenv ("PATH")));
         g_hash_table_insert (hash, g_strdup ("WINDOWPATH"), g_strdup (g_getenv ("WINDOWPATH")));