diff --git a/ChangeLog.txt b/ChangeLog.txt
index e794a95a..09bb0eec 100644
--- a/ChangeLog.txt
+++ b/ChangeLog.txt
@@ -5,6 +5,10 @@ Broker:
 - Fix slow websockets performance when sending large messages. Closes #1390.
 - Fix bridges potentially not connecting on Windows. Closes #478.
 
+Client library:
+- Fix reconnect backoff for the situation where connections are dropped rather
+  than refused. Closes #737.
+
 Documentation:
 - Improve details on global/per listener options in the mosquitto.conf man page.
   Closes #274.
diff --git a/lib/handle_connack.c b/lib/handle_connack.c
index 60780f6c..ab66ff0f 100644
--- a/lib/handle_connack.c
+++ b/lib/handle_connack.c
@@ -31,6 +31,9 @@ Contributors:
 static void connack_callback(struct mosquitto *mosq, uint8_t reason_code, uint8_t connect_flags, const mosquitto_property *properties)
 {
 	log__printf(mosq, MOSQ_LOG_DEBUG, "Client %s received CONNACK (%d)", mosq->id, reason_code);
+	if(reason_code == MQTT_RC_SUCCESS){
+		mosq->reconnects = 0;
+	}
 	pthread_mutex_lock(&mosq->callback_mutex);
 	if(mosq->on_connect){
 		mosq->in_callback = true;
diff --git a/lib/loop.c b/lib/loop.c
index 36763e06..0f751a9c 100644
--- a/lib/loop.c
+++ b/lib/loop.c
@@ -194,7 +194,6 @@ int mosquitto_loop_forever(struct mosquitto *mosq, int timeout, int max_packets)
 {
 	int run = 1;
 	int rc;
-	unsigned int reconnects = 0;
 	unsigned long reconnect_delay;
 #ifndef WIN32
 	struct timespec req, rem;
@@ -202,6 +201,8 @@ int mosquitto_loop_forever(struct mosquitto *mosq, int timeout, int max_packets)
 
 	if(!mosq) return MOSQ_ERR_INVAL;
 
+	mosq->reconnects = 0;
+
 	if(mosq->state == mosq_cs_connect_async){
 		mosquitto_reconnect(mosq);
 	}
@@ -209,9 +210,6 @@ int mosquitto_loop_forever(struct mosquitto *mosq, int timeout, int max_packets)
 	while(run){
 		do{
 			rc = mosquitto_loop(mosq, timeout, max_packets);
-			if (reconnects !=0 && rc == MOSQ_ERR_SUCCESS){
-				reconnects = 0;
-			}
 		}while(run && rc == MOSQ_ERR_SUCCESS);
 		/* Quit after fatal errors. */
 		switch(rc){
@@ -245,9 +243,9 @@ int mosquitto_loop_forever(struct mosquitto *mosq, int timeout, int max_packets)
 
 				if(mosq->reconnect_delay_max > mosq->reconnect_delay){
 					if(mosq->reconnect_exponential_backoff){
-						reconnect_delay = mosq->reconnect_delay*(reconnects+1)*(reconnects+1);
+						reconnect_delay = mosq->reconnect_delay*(mosq->reconnects+1)*(mosq->reconnects+1);
 					}else{
-						reconnect_delay = mosq->reconnect_delay*(reconnects+1);
+						reconnect_delay = mosq->reconnect_delay*(mosq->reconnects+1);
 					}
 				}else{
 					reconnect_delay = mosq->reconnect_delay;
@@ -256,7 +254,7 @@ int mosquitto_loop_forever(struct mosquitto *mosq, int timeout, int max_packets)
 				if(reconnect_delay > mosq->reconnect_delay_max){
 					reconnect_delay = mosq->reconnect_delay_max;
 				}else{
-					reconnects++;
+					mosq->reconnects++;
 				}
 
 #ifdef WIN32
diff --git a/lib/mosquitto_internal.h b/lib/mosquitto_internal.h
index ff656a43..da16dae0 100644
--- a/lib/mosquitto_internal.h
+++ b/lib/mosquitto_internal.h
@@ -326,6 +326,7 @@ struct mosquitto {
 	char *host;
 	int port;
 	char *bind_address;
+	unsigned int reconnects;
 	unsigned int reconnect_delay;
 	unsigned int reconnect_delay_max;
 	bool reconnect_exponential_backoff;