diff --git a/platform/vs/tests/bgp/files/gr_livelock/bgpd.conf b/platform/vs/tests/bgp/files/gr_livelock/bgpd.conf
new file mode 100644
index 0000000000..a26d1d93da
--- /dev/null
+++ b/platform/vs/tests/bgp/files/gr_livelock/bgpd.conf
@@ -0,0 +1,14 @@
+router bgp 65501
+  bgp router-id 1.1.1.1
+  bgp graceful-restart restart-time 180
+  bgp graceful-restart
+  neighbor 10.0.0.1 remote-as 65502
+  address-family ipv4
+    neighbor 10.0.0.1 activate
+    maximum-paths 64
+  exit-address-family
+  neighbor 10.0.0.3 remote-as 65503
+  address-family ipv4
+    neighbor 10.0.0.3 activate
+    maximum-paths 64
+  exit-address-family
diff --git a/platform/vs/tests/bgp/files/gr_livelock/exabgp1.conf b/platform/vs/tests/bgp/files/gr_livelock/exabgp1.conf
new file mode 100644
index 0000000000..0e78bd61db
--- /dev/null
+++ b/platform/vs/tests/bgp/files/gr_livelock/exabgp1.conf
@@ -0,0 +1,21 @@
+neighbor 10.0.0.0 {
+    router-id 1.1.1.2;
+    local-address 10.0.0.1;
+    local-as 65502;
+    peer-as 65501;
+    group-updates false;
+
+    family{
+        ipv4 unicast;
+    }
+
+    static {
+        route 1.1.1.1/32{
+            next-hop 10.0.0.1;
+            community no-export;
+        }
+        route 2.2.2.2/32{
+            next-hop 10.0.0.1;
+        }
+    }
+}
diff --git a/platform/vs/tests/bgp/files/gr_livelock/exabgp1.graceful.conf b/platform/vs/tests/bgp/files/gr_livelock/exabgp1.graceful.conf
new file mode 100644
index 0000000000..377ed024d0
--- /dev/null
+++ b/platform/vs/tests/bgp/files/gr_livelock/exabgp1.graceful.conf
@@ -0,0 +1,26 @@
+neighbor 10.0.0.0 {
+    router-id 1.1.1.2;
+    local-address 10.0.0.1;
+    local-as 65502;
+    peer-as 65501;
+    group-updates false;
+    manual-eor true;
+
+    family{
+        ipv4 unicast;
+    }
+
+    capability {
+        graceful-restart 360;
+    }
+
+    static {
+        route 1.1.1.1/32{
+            next-hop 10.0.0.1;
+            community no-export;
+        }
+        route 2.2.2.2/32{
+            next-hop 10.0.0.1;
+        }
+    }
+}
diff --git a/platform/vs/tests/bgp/files/gr_livelock/exabgp2.conf b/platform/vs/tests/bgp/files/gr_livelock/exabgp2.conf
new file mode 100644
index 0000000000..3e67c18a82
--- /dev/null
+++ b/platform/vs/tests/bgp/files/gr_livelock/exabgp2.conf
@@ -0,0 +1,11 @@
+neighbor 10.0.0.2 {
+    router-id 1.1.1.3;
+    local-address 10.0.0.3;
+    local-as 65503;
+    peer-as 65501;
+    group-updates false;
+
+    family {
+        ipv4 unicast;
+    }
+}
diff --git a/platform/vs/tests/bgp/test_gr_livelock.py b/platform/vs/tests/bgp/test_gr_livelock.py
new file mode 100644
index 0000000000..8ba2b4cc72
--- /dev/null
+++ b/platform/vs/tests/bgp/test_gr_livelock.py
@@ -0,0 +1,143 @@
+from swsscommon import swsscommon
+import os
+import re
+import time
+import json
+import random
+
+def output(dvs, title):
+    print "=========================== %s ===========================" % title
+    exit_cod,  sum_res =  dvs.runcmd(["vtysh", "-c", "show ip bgp sum"])
+    exit_code, all_route = dvs.runcmd(["vtysh", "-c", "show ip bgp"])
+    exit_code, neig_1           = dvs.runcmd(["vtysh", "-c", "show ip bgp neighbors 10.0.0.1"])
+    exit_code, announce_route_1 = dvs.runcmd(["vtysh", "-c", "show ip bgp neighbors 10.0.0.1 advertised-routes"])
+    exit_code, received_route_1 = dvs.runcmd(["vtysh", "-c", "show ip bgp neighbors 10.0.0.1 routes"])
+    exit_code, announce_route_3 = dvs.runcmd(["vtysh", "-c", "show ip bgp neighbors 10.0.0.3 advertised-routes"])
+    exit_code, received_route_3 = dvs.runcmd(["vtysh", "-c", "show ip bgp neighbors 10.0.0.3 routes"])
+    print "Summary:"
+    print sum_res
+    print "Received routes:"
+    print "10.0.0.1"
+    print received_route_1
+    print "10.0.0.3"
+    print received_route_3
+    print "Announces routes:"
+    print "10.0.0.1"
+    print announce_route_1
+    print "10.0.0.3"
+    print announce_route_3
+    print "Neighbors"
+    print "10.0.0.1"
+    print neig_1
+    print "======================================================"
+
+def mkdir(path):
+    if not os.path.exists(path):
+        os.makedirs(path)
+
+def remove(path):
+    if os.path.exists(path):
+        os.unlink(path)
+
+def get_target_env(idx):
+    return '/usr/local/etc/exabgp/exabgp_%d.env' % idx
+
+def prepare_exa_env(dvs, idx):
+    mkdir('/usr/local/etc')
+    mkdir('/usr/local/etc/exabgp')
+    tmp_name = '/tmp/env.%d.%d' % (random.randint(0, 10000000), os.getpid())
+    dvs.servers[idx].runcmd("exabgp --fi > %s" % tmp_name)
+    with open(tmp_name) as r_fp:
+        with open(get_target_env(idx), 'w') as w_fp:
+            for line in r_fp:
+                if line.startswith('pipename'):
+                    line = "pipename = 'exabgp.%d'\n" % idx
+                w_fp.write(line)
+    os.unlink(tmp_name)
+
+
+def run_exa(dvs, idx, cfg):
+    prepare_exa_env(dvs, idx)
+    run_dir = "/var/run/exabgp"
+    mkdir(run_dir)
+    fifo_in_path  = "%s/exabgp.%d.in"  % (run_dir, idx)
+    fifo_out_path = "%s/exabgp.%d.out" % (run_dir, idx)
+    remove(fifo_in_path)
+    remove(fifo_out_path)
+    os.mkfifo(fifo_in_path)
+    os.mkfifo(fifo_out_path)
+    os.chmod(fifo_in_path,  0666)
+    os.chmod(fifo_out_path, 0666)
+    print "!!! Start exabgp instance %d" % idx
+    cmd = "exabgp -d --env %s %s" % (get_target_env(idx), cfg)
+    print "Cmd is ___ %s ___" % cmd
+    return dvs.servers[idx].runcmd_async(cmd)
+
+def run_exacli(dvs, idx, cmd):
+    return dvs.servers[idx].runcmd('exabgpcli --env %s %s' % (get_target_env(idx), cmd))
+
+def test_gr_livelock(dvs, testlog):
+    # update exabgp to version 4.0.10
+    dvs.servers[0].runcmd("pip install 'exabgp==4.0.10' --force-reinstall ")
+    #
+    dvs.copy_file("/etc/quagga/", "bgp/files/gr_livelock/bgpd.conf")
+    dvs.servers[0].runcmd("pkill exabgp") # In case previous test didn't stop exa
+    dvs.runcmd("supervisorctl stop bgpd")
+    time.sleep(5)
+    dvs.runcmd("supervisorctl start bgpd")
+    dvs.runcmd("ip addr add 10.0.0.0/31 dev Ethernet0")
+    dvs.runcmd("ifconfig Ethernet0 up")
+
+    dvs.runcmd("ip addr add 10.0.0.2/31 dev Ethernet4")
+    dvs.runcmd("ifconfig Ethernet4 up")
+
+    dvs.servers[0].runcmd("ip addr add 10.0.0.1/31 dev eth0")
+    dvs.servers[0].runcmd("ifconfig eth0 up")
+
+    dvs.servers[1].runcmd("ip addr add 10.0.0.3/31 dev eth0")
+    dvs.servers[1].runcmd("ifconfig eth0 up")
+
+    time.sleep(5)
+
+    # Run two bgp neighbors
+    p1 = run_exa(dvs, 0, "bgp/files/gr_livelock/exabgp1.conf")
+    p2 = run_exa(dvs, 1, "bgp/files/gr_livelock/exabgp2.conf")
+
+    time.sleep(30)
+
+    output(dvs, "First neighbor doesn't have GR enabled")
+
+    # Check that we announce routes from the 1st neigbbor to 2nd, if 1st neighbor doesn't support graceful restart
+    _, announced_routes = dvs.runcmd(["vtysh", "-c", "show ip bgp neighbors 10.0.0.3 advertised-routes"])
+    assert '2.2.2.2/32' in announced_routes
+
+    # Stop 1st neighbor
+    run_exacli(dvs, 0, 'shutdown')
+    p1 = p1.wait()
+
+    # Wait until quagga thinks that 1st neighbor was shut down
+    time.sleep(300)
+
+    # Start the 1st neighbor again with graceful restart enabled
+    p1 = run_exa(dvs, 0, "bgp/files/gr_livelock/exabgp1.graceful.conf")
+
+    time.sleep(60)
+
+    output(dvs, "First neighbor has GR enalbed")
+
+    run_exacli(dvs, 0, 'announce route 1.10.0.0/24 next-hop self')
+
+    time.sleep(60)
+
+    output(dvs, "Announced a new route from the first neighbor")
+
+    # Check that we announce all routes from the 1st neighbor
+    _, announced_routes = dvs.runcmd(["vtysh", "-c", "show ip bgp neighbors 10.0.0.3 advertised-routes"])
+    assert '2.2.2.2/32'  in announced_routes
+    assert '1.10.0.0/24' in announced_routes
+
+    run_exacli(dvs, 0, 'shutdown')
+    p1 = p1.wait()
+
+    run_exacli(dvs, 1, 'shutdown')
+    p2 = p2.wait()
diff --git a/src/sonic-quagga b/src/sonic-quagga
index 4b7825c2ee..e5ede97424 160000
--- a/src/sonic-quagga
+++ b/src/sonic-quagga
@@ -1 +1 @@
-Subproject commit 4b7825c2ee71c9e8603d1ade3aaf76982f7dbf49
+Subproject commit e5ede97424ad764b10af768d2e99cb4357177b7a