diff --git a/eclipse/src/plugin-resources/templates/classpath.jelly b/eclipse/src/plugin-resources/templates/classpath.jelly
index dc470374..4c9f0718 100644
--- a/eclipse/src/plugin-resources/templates/classpath.jelly
+++ b/eclipse/src/plugin-resources/templates/classpath.jelly
@@ -150,7 +150,13 @@
         <j:set var="isClasspath" value="${lib.dependency.isAddedToClasspath()}"/>
         <j:if test="${isClasspath}">
           <maven:makeRelativePath var="relativePath" basedir="${maven.repo.local}" path="${lib.path}"/>
-          <classpathentry kind="var" path="MAVEN_REPO/${relativePath}"/>
+          <u:file var="checkExist" name="${maven.repo.local}/${relativePath}" />
+          <j:if test="${checkExist.exists()}">
+            <classpathentry kind="var" path="MAVEN_REPO/${relativePath}"/>
+	      </j:if>
+          <j:if test="${!checkExist.exists()}">
+	        <classpathentry kind="lib" path="${lib.path}"/>
+	      </j:if>
         </j:if>
       </j:otherwise>
     </j:choose>
diff --git a/eclipse/xdocs/changes.xml b/eclipse/xdocs/changes.xml
index 6107c2b9..ff7ec314 100644
--- a/eclipse/xdocs/changes.xml
+++ b/eclipse/xdocs/changes.xml
@@ -25,6 +25,7 @@
   </properties>
   <body>
     <release version="1.9" date="in cvs">
+      <action dev="epugh" type="fix" issue="MPECLIPSE-46" due-to="Archimedes Trajano">Overriden jar that resides outside maven repo doesn't get resolved properly.</action>
       <action dev="epugh" type="fix" issue="MPECLIPSE-38">Jar overrides are now properly supported.</action>
     </release>
     <release version="1.8" date="2004-08-14">
