diff --git a/src/iodined.c b/src/iodined.c
index 1e9eeac..e5a8393 100644
--- a/src/iodined.c
+++ b/src/iodined.c
@@ -791,6 +791,8 @@ main(int argc, char **argv)
 	int port;
 	int mtu;
 	int skipipconfig;
+	int netmask;
+	int created_users;
 
 	username = NULL;
 	newroot = NULL;
@@ -805,6 +807,7 @@ main(int argc, char **argv)
 	check_ip = 1;
 	skipipconfig = 0;
 	debug = 0;
+	netmask = 27;
 
 	b32 = get_base32_encoder();
 
@@ -954,6 +957,10 @@ main(int argc, char **argv)
 		warnx("Bad IP address to return as nameserver.\n");
 		usage();
 	}
+	if (netmask > 30 || netmask < 8) {
+		warnx("Bad netmask (%d bits). Use 8-30 bits.\n", netmask);
+		usage();
+	}
 	
 	if (strlen(password) == 0)
 		read_password(password, sizeof(password));
@@ -970,8 +977,13 @@ main(int argc, char **argv)
 			goto cleanup3;
 
 	my_mtu = mtu;
-	init_users(my_ip);
 
+	created_users = init_users(my_ip, netmask);
+	
+	if (created_users < USERS) {
+		printf("Limiting to %d simultaneous users because of netmask /%d\n",
+			created_users, netmask);
+	}
 	printf("Listening to dns for domain %s\n", topdomain);
 
 	if (foreground == 0) 
diff --git a/src/user.c b/src/user.c
index 1cda64b..26d49b8 100644
--- a/src/user.c
+++ b/src/user.c
@@ -35,17 +35,49 @@
 
 struct user users[USERS];
 
-void
-init_users(in_addr_t my_ip)
+int
+init_users(in_addr_t my_ip, int netbits)
 {
 	int i;
+	int skip = 0;
 	char newip[16];
+	int created_users = 0;
+
+	int maxusers;
+
+	in_addr_t netmask = 0;
+	struct in_addr net;
+	struct in_addr ipstart;
+
+	for (i = 0; i < netbits; i++) {
+		netmask = (netmask << 1) | 1;
+	}
+	netmask <<= (32 - netbits);
+	net.s_addr = htonl(netmask);
+	ipstart.s_addr = my_ip & net.s_addr;
+
+	maxusers = (1 << (32-netbits)) - 3; /* 3: Net addr, broadcast addr, iodined addr */
 	
 	memset(users, 0, USERS * sizeof(struct user));
 	for (i = 0; i < USERS; i++) {
+		in_addr_t ip;
 		users[i].id = i;
-		snprintf(newip, sizeof(newip), "0.0.0.%d", i + 1);
-		users[i].tun_ip = my_ip + inet_addr(newip);;
+		snprintf(newip, sizeof(newip), "0.0.0.%d", i + skip + 1);
+		ip = ipstart.s_addr + inet_addr(newip);
+		if (ip == my_ip && skip == 0) {
+			/* This IP was taken by iodined */
+			skip++;
+			snprintf(newip, sizeof(newip), "0.0.0.%d", i + skip + 1);
+			ip = ipstart.s_addr + inet_addr(newip);
+		}
+		users[i].tun_ip = ip;
+		net.s_addr = ip;
+		if (maxusers--  < 1) {
+			users[i].disabled = 1;
+		} else {
+			users[i].disabled = 0;
+			created_users++;
+		}
 		users[i].inpacket.len = 0;
 		users[i].inpacket.offset = 0;
 		users[i].outpacket.len = 0;
@@ -53,6 +85,8 @@ init_users(in_addr_t my_ip)
 		users[i].out_acked_seqno = 0;
 		users[i].out_acked_fragment = 0;
 	}
+
+	return created_users;
 }
 
 int
@@ -63,7 +97,8 @@ users_waiting_on_reply()
 
 	ret = 0;
 	for (i = 0; i < USERS; i++) {
-		if (users[i].active && users[i].last_pkt + 60 > time(NULL) &&
+		if (users[i].active && !users[i].disabled && 
+			users[i].last_pkt + 60 > time(NULL) &&
 			users[i].q.id != 0) {
 			ret++;
 		}
@@ -80,7 +115,8 @@ find_user_by_ip(uint32_t ip)
 
 	ret = -1;
 	for (i = 0; i < USERS; i++) {
-		if (users[i].active && users[i].last_pkt + 60 > time(NULL) &&
+		if (users[i].active && !users[i].disabled &&
+			users[i].last_pkt + 60 > time(NULL) &&
 			ip == users[i].tun_ip) {
 			ret = i;
 			break;
@@ -99,7 +135,8 @@ all_users_waiting_to_send()
 	ret = 1;
 	now = time(NULL);
 	for (i = 0; i < USERS; i++) {
-		if (users[i].active && users[i].last_pkt + 60 > now &&
+		if (users[i].active && !users[i].disabled &&
+			users[i].last_pkt + 60 > now &&
 			users[i].outpacket.len == 0) {
 			ret = 0;
 			break;
@@ -115,7 +152,7 @@ find_available_user()
 	int i;
 	for (i = 0; i < USERS; i++) {
 		/* Not used at all or not used in one minute */
-		if (!users[i].active || users[i].last_pkt + 60 < time(NULL)) {
+		if ((!users[i].active || users[i].last_pkt + 60 < time(NULL)) && !users[i].disabled) {
 			users[i].active = 1;
 			users[i].last_pkt = time(NULL);
 			ret = i;
diff --git a/src/user.h b/src/user.h
index e877524..caee959 100644
--- a/src/user.h
+++ b/src/user.h
@@ -22,6 +22,7 @@
 struct user {
 	char id;
 	int active;
+	int disabled;
 	time_t last_pkt;
 	int seed;
 	in_addr_t tun_ip;
@@ -36,7 +37,7 @@ struct user {
 
 extern struct user users[USERS];
 
-void init_users(in_addr_t);
+int init_users(in_addr_t, int);
 int users_waiting_on_reply();
 int find_user_by_ip(uint32_t);
 int all_users_waiting_to_send();
diff --git a/tests/user.c b/tests/user.c
index 5514fd8..5983717 100644
--- a/tests/user.c
+++ b/tests/user.c
@@ -34,7 +34,7 @@ START_TEST(test_init_users)
 	int i;
 
 	ip = inet_addr("127.0.0.1");
-	init_users(ip);
+	init_users(ip, 27);
 	for (i = 0; i < USERS; i++) {
 		fail_unless(users[i].id == i);
 		fail_unless(users[i].q.id == 0);
@@ -51,7 +51,7 @@ START_TEST(test_users_waiting)
 	in_addr_t ip;
 
 	ip = inet_addr("127.0.0.1");
-	init_users(ip);
+	init_users(ip, 27);
 
 	fail_unless(users_waiting_on_reply() == 0);
 
@@ -75,7 +75,7 @@ START_TEST(test_find_user_by_ip)
 	unsigned int testip;
 
 	ip = inet_addr("127.0.0.1");
-	init_users(ip);
+	init_users(ip, 27);
 
 	testip = (unsigned int) inet_addr("10.0.0.1");
 	fail_unless(find_user_by_ip(testip) == -1);
@@ -100,7 +100,7 @@ START_TEST(test_all_users_waiting_to_send)
 	in_addr_t ip;
 
 	ip = inet_addr("127.0.0.1");
-	init_users(ip);
+	init_users(ip, 27);
 
 	fail_unless(all_users_waiting_to_send() == 1);
 	
@@ -124,7 +124,7 @@ START_TEST(test_find_available_user)
 	int i;
 
 	ip = inet_addr("127.0.0.1");
-	init_users(ip);
+	init_users(ip, 27);
 
 	for (i = 0; i < USERS; i++) {
 		fail_unless(find_available_user() == i);
@@ -146,6 +146,34 @@ START_TEST(test_find_available_user)
 }
 END_TEST
 
+START_TEST(test_find_available_user_small_net)
+{
+	in_addr_t ip;
+	int i;
+
+	ip = inet_addr("127.0.0.1");
+	init_users(ip, 29); /* this should result in 5 enabled users */
+
+	for (i = 0; i < 5; i++) {
+		fail_unless(find_available_user() == i);
+	}
+
+	for (i = 0; i < USERS; i++) {
+		fail_unless(find_available_user() == -1);
+	}
+
+	users[3].active = 0;
+
+	fail_unless(find_available_user() == 3);
+	fail_unless(find_available_user() == -1);
+
+	users[3].last_pkt = 55;
+	
+	fail_unless(find_available_user() == 3);
+	fail_unless(find_available_user() == -1);
+}
+END_TEST
+
 TCase *
 test_user_create_tests()
 {
@@ -157,6 +185,7 @@ test_user_create_tests()
 	tcase_add_test(tc, test_find_user_by_ip);
 	tcase_add_test(tc, test_all_users_waiting_to_send);
 	tcase_add_test(tc, test_find_available_user);
+	tcase_add_test(tc, test_find_available_user_small_net);
 
 	return tc;
 }