diff --git a/target/linux/ixp4xx-2.6/Makefile b/target/linux/ixp4xx-2.6/Makefile
index 5eea6d6258..6357bcc86b 100644
--- a/target/linux/ixp4xx-2.6/Makefile
+++ b/target/linux/ixp4xx-2.6/Makefile
@@ -9,7 +9,7 @@ include $(TOPDIR)/rules.mk
 ARCH:=armeb
 BOARD:=ixp4xx
 BOARDNAME:=Intel XScale IXP4xx
-FEATURES:=jffs2
+FEATURES:=squashfs jffs2
 
 define Target/Description
 endef
diff --git a/target/linux/ixp4xx-2.6/config/default b/target/linux/ixp4xx-2.6/config/default
index 0869aa5147..6d4fdd0b65 100644
--- a/target/linux/ixp4xx-2.6/config/default
+++ b/target/linux/ixp4xx-2.6/config/default
@@ -223,7 +223,7 @@ CONFIG_MACH_NAS100D=y
 CONFIG_MACH_NSLU2=y
 # CONFIG_MAC_PARTITION is not set
 # CONFIG_MINIX_FS is not set
-CONFIG_MINI_FO=m
+CONFIG_MINI_FO=y
 CONFIG_MTD=y
 # CONFIG_MTD_ABSENT is not set
 # CONFIG_MTD_AFS_PARTS is not set
@@ -436,7 +436,6 @@ CONFIG_RWSEM_GENERIC_SPINLOCK=y
 # CONFIG_SOUND is not set
 # CONFIG_SPARSEMEM_STATIC is not set
 CONFIG_SPLIT_PTLOCK_CPUS=4096
-# CONFIG_SQUASHFS is not set
 # CONFIG_SWAP is not set
 CONFIG_SYN_COOKIES=y
 # CONFIG_TCP_CONG_HSTCP is not set
diff --git a/target/linux/ixp4xx-2.6/image/Makefile b/target/linux/ixp4xx-2.6/image/Makefile
index bb33aff7f8..52cca6668a 100644
--- a/target/linux/ixp4xx-2.6/image/Makefile
+++ b/target/linux/ixp4xx-2.6/image/Makefile
@@ -37,17 +37,27 @@ define Image/Build
 	$(call Image/Build/$(1),$(1))
 endef
 
+define Image/Build/slug
+	BIN_DIR=$(BIN_DIR) $(TOPDIR)/scripts/slugimage.pl \
+		-L $(KDIR)/apex-nslu2-armeb.bin -m $(KDIR)/NPE-B \
+		-k $(BIN_DIR)/openwrt-nslu2-$(KERNEL)-zImage \
+		-r Flashdisk:$(BIN_DIR)/openwrt-$(BOARD)-$(KERNEL)-$(1).img \
+		-p -o $(BIN_DIR)/openwrt-nslu2-$(KERNEL)-$(1).bin
+endef
+
 define Image/Build/jffs2-64k
 	dd if=$(KDIR)/root.$(1) of=$(BIN_DIR)/openwrt-$(BOARD)-$(KERNEL)-$(1).img bs=65536 conv=sync
 endef
 
 define Image/Build/jffs2-128k
 	dd if=$(KDIR)/root.$(1) of=$(BIN_DIR)/openwrt-$(BOARD)-$(KERNEL)-$(1).img bs=131072 conv=sync
-	BIN_DIR=$(BIN_DIR) $(TOPDIR)/scripts/slugimage.pl \
-		-L $(KDIR)/apex-nslu2-armeb.bin -m $(KDIR)/NPE-B \
-		-k $(BIN_DIR)/openwrt-nslu2-$(KERNEL)-zImage \
-		-r Flashdisk:$(BIN_DIR)/openwrt-$(BOARD)-$(KERNEL)-$(1).img \
-		-p -o $(BIN_DIR)/openwrt-nslu2-$(KERNEL)-$(1).bin
+	$(call Image/Build/slug,$(1))
+endef
+
+define Image/Build/squashfs
+    $(call prepare_generic_squashfs,$(KDIR)/root.squashfs)
+	dd if=$(KDIR)/root.$(1) of=$(BIN_DIR)/openwrt-$(BOARD)-$(KERNEL)-$(1).img bs=131072 conv=sync
+	$(call Image/Build/slug,$(1))
 endef
 
 $(eval $(call BuildImage))