=== modified file 'bzrlib/transport/sftp.py'
--- bzrlib/transport/sftp.py	
+++ bzrlib/transport/sftp.py	
@@ -22,6 +22,7 @@
 import os
 import random
 import re
+import select
 import stat
 import subprocess
 import sys
@@ -300,6 +301,7 @@
         except (NoSuchFile,):
             # What specific errors should we catch here?
             pass
+
 
 class SFTPTransport (Transport):
     """
@@ -905,9 +907,9 @@
 nvuQES5C9BMHjF39LZiGH1iLQy7FgdHyoP+eodI7
 -----END RSA PRIVATE KEY-----
 """
-    
-
-class SingleListener(threading.Thread):
+
+
+class SocketListener(threading.Thread):
 
     def __init__(self, callback):
         threading.Thread.__init__(self)
@@ -917,25 +919,33 @@
         self._socket.bind(('localhost', 0))
         self._socket.listen(1)
         self.port = self._socket.getsockname()[1]
-        self.stop_event = threading.Event()
-
-    def run(self):
-        s, _ = self._socket.accept()
-        # now close the listen socket
-        self._socket.close()
-        try:
-            self._callback(s, self.stop_event)
-        except socket.error:
-            pass #Ignore socket errors
-        except Exception, x:
-            # probably a failed test
-            warning('Exception from within unit test server thread: %r' % x)
+        self._stop_event = threading.Event()
 
     def stop(self):
-        self.stop_event.set()
+        self._stop_event.set()
         # use a timeout here, because if the test fails, the server thread may
         # never notice the stop_event.
         self.join(5.0)
+        self._socket.close()
+
+    def run(self):
+        while True:
+            readable, _, _ = select.select([self._socket], [], [], 0.1)
+            if self._stop_event.isSet():
+                return
+            if len(readable) == 0:
+                continue
+            try:
+                s, _ = self._socket.accept()
+                # because the loopback socket is inline, and transports are
+                # never explicitly closed, best to launch a new thread.
+                threading.Thread(target=self._callback, args=(s,)).start()
+            except socket.error, x:
+                pass #Ignore socket errors
+            except Exception, x:
+                # probably a failed test
+                sys.excepthook(*sys.exc_info())
+                warning('Exception from within unit test server thread: %r' % x)
 
 
 class SFTPServer(Server):
@@ -959,10 +969,12 @@
         """StubServer uses this to log when a new server is created."""
         self.logs.append(message)
 
-    def _run_server(self, s, stop_event):
+    def _run_server(self, s):
         ssh_server = paramiko.Transport(s)
         key_file = os.path.join(self._homedir, 'test_rsa.key')
-        file(key_file, 'w').write(STUB_SERVER_KEY)
+        f = open(key_file, 'w')
+        f.write(STUB_SERVER_KEY)
+        f.close()
         host_key = paramiko.RSAKey.from_private_key_file(key_file)
         ssh_server.add_server_key(host_key)
         server = StubServer(self)
@@ -972,7 +984,6 @@
         event = threading.Event()
         ssh_server.start_server(event, server)
         event.wait(5.0)
-        stop_event.wait(30.0)
     
     def setUp(self):
         global _ssh_vendor
@@ -983,7 +994,7 @@
             self._server_homedir = self._homedir
         self._root = '/'
         # FIXME WINDOWS: _root should be _server_homedir[0]:/
-        self._listener = SingleListener(self._run_server)
+        self._listener = SocketListener(self._run_server)
         self._listener.setDaemon(True)
         self._listener.start()
 
@@ -1009,7 +1020,7 @@
         super(SFTPServerWithoutSSH, self).__init__()
         self._vendor = 'loopback'
 
-    def _run_server(self, sock, stop_event):
+    def _run_server(self, sock):
         class FakeChannel(object):
             def get_transport(self):
                 return self
@@ -1019,6 +1030,8 @@
                 return '1'
             def get_hexdump(self):
                 return False
+            def close(self):
+                pass
 
         server = paramiko.SFTPServer(FakeChannel(), 'sftp', StubServer(self), StubSFTPServer,
                                      root=self._root, home=self._server_homedir)