diff --git a/lisp/org-publish.el b/lisp/org-publish.el
index 54d489c..40553f1 100644
--- a/lisp/org-publish.el
+++ b/lisp/org-publish.el
@@ -583,6 +583,8 @@ Default for INDEX-FILENAME is 'index.org'."
   (let* ((project-plist (cdr project))
 	 (dir (file-name-as-directory
 	       (plist-get project-plist :base-directory)))
+     (localdir (file-name-directory dir))
+     (indent-str (make-string 2 ? ))
 	 (exclude-regexp (plist-get project-plist :exclude))
 	 (files (org-publish-get-base-files project exclude-regexp))
 	 (index-filename (concat dir (or index-filename "index.org")))
@@ -597,15 +599,35 @@ Default for INDEX-FILENAME is 'index.org'."
     (with-temp-buffer
       (insert (concat index-title "\n\n"))
       (while (setq file (pop files))
-	(let ((fn (file-name-nondirectory file)))
+	(let ((fn (file-name-nondirectory file))
+          (link (file-relative-name file dir))
+          (oldlocal localdir))
 	  ;; index shouldn't index itself
-	  (unless (string= fn ifn)
-	    (insert (concat " + [[file:" fn "]["
+      (unless (string= fn ifn)
+        (setq localdir (concat (file-name-as-directory dir) (file-name-directory link)))
+        (unless (string= localdir oldlocal)
+          (if (string= (file-name-directory (directory-file-name localdir))
+                       (file-name-directory (directory-file-name oldlocal)))
+              (progn                    ; next subdir, same parent
+                (setq indent-str (make-string (- (length indent-str) 2) ? ))
+                (insert (concat indent-str " + [[file:" (file-relative-name localdir dir)
+                                "][" (file-relative-name localdir dir) "]]\n"))
+                (setq indent-str (make-string (+ (length indent-str) 2) ? )))
+            (if (> (length localdir) (length oldlocal))
+                (progn                  ; entering deeper subdir
+                  (insert (concat indent-str " + [[file:" (file-relative-name localdir dir)
+                                  "][" (file-relative-name localdir dir) "]]\n"))
+                  (setq indent-str (make-string (+ (length indent-str) 2) ? )))
+                                        ; up directory
+              (setq indent-str (make-string (- (length indent-str) 2) ? )))))
+        (insert (concat indent-str " + [[file:" link "]["
 			    (file-name-sans-extension fn)
 			    "]]\n")))))
       (write-file index-filename)
       (kill-buffer (current-buffer)))))
 
+
+
 ;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;
 ;;; Interactive publishing functions