diff --git a/src/confd/configure.ac b/src/confd/configure.ac
index 3728e902..40cc2f9a 100644
--- a/src/confd/configure.ac
+++ b/src/confd/configure.ac
@@ -9,6 +9,7 @@ LT_INIT
 AC_CONFIG_FILES([
 	Makefile
 	src/Makefile
+	src/confd/Makefile
 	yang/Makefile
 ])
 
diff --git a/src/confd/src/Makefile.am b/src/confd/src/Makefile.am
index 4c381678..fa478382 100644
--- a/src/confd/src/Makefile.am
+++ b/src/confd/src/Makefile.am
@@ -1,12 +1,3 @@
-CFLAGS                 += -Wall -Wextra -Werror -Wno-unused-parameter
-AM_CPPFLAGS             = -D_DEFAULT_SOURCE -D_XOPEN_SOURCE -D_GNU_SOURCE -DYANG_PATH_=\"$(YANGDIR)\"
+AUTOMAKE_OPTIONS = subdir-objects
 
-plugindir               = $(srpdplugindir)
-plugin_LTLIBRARIES      = confd-plugin.la
-
-confd_plugin_la_CFLAGS  = $(augeas_CFLAGS) $(jansson_CFLAGS) $(libite_CFLAGS) $(sysrepo_CFLAGS) $(CFLAGS)
-confd_plugin_la_LIBADD  = $(augeas_LIBS)   $(jansson_LIBS)   $(libite_LIBS)   $(sysrepo_LIBS)
-confd_plugin_la_LDFLAGS = -module -avoid-version -shared
-confd_plugin_la_SOURCES = core.c core.h helpers.c helpers.h srx_module.c srx_module.h srx_val.c srx_val.h \
-			  ietf-system.c ietf-interfaces.c systemv.c systemv.h lyx.c lyx.h dagger.c dagger.h \
-			  infix-dhcp.c
+SUBDIRS = confd
diff --git a/src/confd/src/confd/Makefile.am b/src/confd/src/confd/Makefile.am
new file mode 100644
index 00000000..4c381678
--- /dev/null
+++ b/src/confd/src/confd/Makefile.am
@@ -0,0 +1,12 @@
+CFLAGS                 += -Wall -Wextra -Werror -Wno-unused-parameter
+AM_CPPFLAGS             = -D_DEFAULT_SOURCE -D_XOPEN_SOURCE -D_GNU_SOURCE -DYANG_PATH_=\"$(YANGDIR)\"
+
+plugindir               = $(srpdplugindir)
+plugin_LTLIBRARIES      = confd-plugin.la
+
+confd_plugin_la_CFLAGS  = $(augeas_CFLAGS) $(jansson_CFLAGS) $(libite_CFLAGS) $(sysrepo_CFLAGS) $(CFLAGS)
+confd_plugin_la_LIBADD  = $(augeas_LIBS)   $(jansson_LIBS)   $(libite_LIBS)   $(sysrepo_LIBS)
+confd_plugin_la_LDFLAGS = -module -avoid-version -shared
+confd_plugin_la_SOURCES = core.c core.h helpers.c helpers.h srx_module.c srx_module.h srx_val.c srx_val.h \
+			  ietf-system.c ietf-interfaces.c systemv.c systemv.h lyx.c lyx.h dagger.c dagger.h \
+			  infix-dhcp.c
diff --git a/src/confd/src/core.c b/src/confd/src/confd/core.c
similarity index 100%
rename from src/confd/src/core.c
rename to src/confd/src/confd/core.c
diff --git a/src/confd/src/core.h b/src/confd/src/confd/core.h
similarity index 100%
rename from src/confd/src/core.h
rename to src/confd/src/confd/core.h
diff --git a/src/confd/src/dagger.c b/src/confd/src/confd/dagger.c
similarity index 100%
rename from src/confd/src/dagger.c
rename to src/confd/src/confd/dagger.c
diff --git a/src/confd/src/dagger.h b/src/confd/src/confd/dagger.h
similarity index 100%
rename from src/confd/src/dagger.h
rename to src/confd/src/confd/dagger.h
diff --git a/src/confd/src/helpers.c b/src/confd/src/confd/helpers.c
similarity index 100%
rename from src/confd/src/helpers.c
rename to src/confd/src/confd/helpers.c
diff --git a/src/confd/src/helpers.h b/src/confd/src/confd/helpers.h
similarity index 100%
rename from src/confd/src/helpers.h
rename to src/confd/src/confd/helpers.h
diff --git a/src/confd/src/ietf-interfaces.c b/src/confd/src/confd/ietf-interfaces.c
similarity index 100%
rename from src/confd/src/ietf-interfaces.c
rename to src/confd/src/confd/ietf-interfaces.c
diff --git a/src/confd/src/ietf-system.c b/src/confd/src/confd/ietf-system.c
similarity index 100%
rename from src/confd/src/ietf-system.c
rename to src/confd/src/confd/ietf-system.c
diff --git a/src/confd/src/infix-dhcp.c b/src/confd/src/confd/infix-dhcp.c
similarity index 100%
rename from src/confd/src/infix-dhcp.c
rename to src/confd/src/confd/infix-dhcp.c
diff --git a/src/confd/src/lyx.c b/src/confd/src/confd/lyx.c
similarity index 100%
rename from src/confd/src/lyx.c
rename to src/confd/src/confd/lyx.c
diff --git a/src/confd/src/lyx.h b/src/confd/src/confd/lyx.h
similarity index 100%
rename from src/confd/src/lyx.h
rename to src/confd/src/confd/lyx.h
diff --git a/src/confd/src/srx_module.c b/src/confd/src/confd/srx_module.c
similarity index 100%
rename from src/confd/src/srx_module.c
rename to src/confd/src/confd/srx_module.c
diff --git a/src/confd/src/srx_module.h b/src/confd/src/confd/srx_module.h
similarity index 100%
rename from src/confd/src/srx_module.h
rename to src/confd/src/confd/srx_module.h
diff --git a/src/confd/src/srx_val.c b/src/confd/src/confd/srx_val.c
similarity index 100%
rename from src/confd/src/srx_val.c
rename to src/confd/src/confd/srx_val.c
diff --git a/src/confd/src/srx_val.h b/src/confd/src/confd/srx_val.h
similarity index 100%
rename from src/confd/src/srx_val.h
rename to src/confd/src/confd/srx_val.h
diff --git a/src/confd/src/systemv.c b/src/confd/src/confd/systemv.c
similarity index 100%
rename from src/confd/src/systemv.c
rename to src/confd/src/confd/systemv.c
diff --git a/src/confd/src/systemv.h b/src/confd/src/confd/systemv.h
similarity index 100%
rename from src/confd/src/systemv.h
rename to src/confd/src/confd/systemv.h