diff --git a/cloudconfig/cloudinit/cloudinit_test.go b/cloudconfig/cloudinit/cloudinit_test.go
index 710f8f8..d5f6b6c 100644
--- a/cloudconfig/cloudinit/cloudinit_test.go
+++ b/cloudconfig/cloudinit/cloudinit_test.go
@@ -210,6 +210,44 @@ var ctests = []struct {
 		cfg.AddPackage("ubuntu")
 	},
 }, {
+	"Packages on precise, needing cloud-tools",
+	map[string]interface{}{"packages": []string{
+		// Regular packages (not needing the cloud-tools archive)
+		"juju",
+		"curl",
+		// The following need to be among the list of cloud-tools
+		// packages (see cloudArchivePackagesUbuntu in juju/utils
+		// repo).
+		"--target-release", "precise-updates/cloud-tools", "cloud-utils",
+		"--target-release", "precise-updates/cloud-tools", "cloud-image-utils",
+		// Other regular packages.
+		"ubuntu",
+	}},
+	func(cfg cloudinit.CloudConfig) {
+		cfg.AddPackage("juju")
+		cfg.AddPackage("curl")
+		// cloud-tools packages need to appear in the list of packages
+		// after the "--target-release" and
+		// "precise-updates/cloud-tools" lines to work around the
+		// broken 0.6.3 cloud-init on precise. cloud-init 0.6.3
+		// concatenates all space-separated arguments for each entry
+		// in the packages list, and then escapes the result in single
+		// quotes, which in turn leads to incorrectly rendered apt-get
+		// command (e.g. instead of "apt-get install --target-release
+		// foo/bar package" 0.6.3 will try to execute "apt-get install
+		// '--target-release foo/bar package'".). See bug #1424777 for
+		// more info.
+		cfg.AddPackage("--target-release")
+		cfg.AddPackage("precise-updates/cloud-tools")
+		cfg.AddPackage("cloud-utils")
+
+		cfg.AddPackage("--target-release")
+		cfg.AddPackage("precise-updates/cloud-tools")
+		cfg.AddPackage("cloud-image-utils")
+
+		cfg.AddPackage("ubuntu")
+	},
+}, {
 	"BootCmd",
 	map[string]interface{}{"bootcmd": []string{
 		"ls > /dev",
@@ -300,7 +338,7 @@ var ctests = []struct {
 func (S) TestOutput(c *gc.C) {
 	for i, t := range ctests {
 		c.Logf("test %d: %s", i, t.name)
-		cfg, err := cloudinit.New("trusty")
+		cfg, err := cloudinit.New("precise")
 		c.Assert(err, jc.ErrorIsNil)
 		t.setOption(cfg)
 		data, err := cfg.RenderYAML()
@@ -315,7 +353,7 @@ func (S) TestOutput(c *gc.C) {
 }
 
 func (S) TestRunCmds(c *gc.C) {
-	cfg, err := cloudinit.New("trusty")
+	cfg, err := cloudinit.New("precise")
 	c.Assert(err, jc.ErrorIsNil)
 	c.Assert(cfg.RunCmds(), gc.HasLen, 0)
 	cfg.AddScripts("a", "b")
@@ -326,7 +364,7 @@ func (S) TestRunCmds(c *gc.C) {
 }
 
 func (S) TestPackages(c *gc.C) {
-	cfg, err := cloudinit.New("trusty")
+	cfg, err := cloudinit.New("precise")
 	c.Assert(err, jc.ErrorIsNil)
 	c.Assert(cfg.Packages(), gc.HasLen, 0)
 	cfg.AddPackage("a b c")
diff --git a/cloudconfig/cloudinit/cloudinit_ubuntu.go b/cloudconfig/cloudinit/cloudinit_ubuntu.go
index bfa10ef..a040445 100644
--- a/cloudconfig/cloudinit/cloudinit_ubuntu.go
+++ b/cloudconfig/cloudinit/cloudinit_ubuntu.go
@@ -196,16 +196,35 @@ func (cfg *ubuntuCloudConfig) getCommandsForAddingPackages() ([]string, error) {
 		cmds = append(cmds, looper+cfg.paccmder.UpgradeCmd())
 	}
 
+	var pkgsWithTargetRelease []string
 	pkgs := cfg.Packages()
 	for i, _ := range pkgs {
 		pack := pkgs[i]
-		// apply --target-release, if required.
-		if config.SeriesRequiresCloudArchiveTools(cfg.series) && cfg.pacconfer.IsCloudArchivePackage(pack) {
-			pack = strings.Join(cfg.pacconfer.ApplyCloudArchiveTarget(pack), " ")
+		if pack == "--target-release" || len(pkgsWithTargetRelease) > 0 {
+			// We have --target-release foo/bar package. Accumulate
+			// the args until we've reached the package, before
+			// passing the 3 element slice to InstallCmd below.
+			pkgsWithTargetRelease = append(pkgsWithTargetRelease, pack)
+			if len(pkgsWithTargetRelease) < 3 {
+				// We expect exactly 3 elements, the last one being
+				// the package.
+				continue
+			}
+		}
+		packageName := pack
+		installArgs := []string{pack}
+
+		if len(pkgsWithTargetRelease) == 3 {
+			// If we have a --target-release package, build the
+			// install command args from the accumulated
+			// pkgsWithTargetRelease slice and reset it.
+			installArgs = append([]string{}, pkgsWithTargetRelease...)
+			packageName = strings.Join(installArgs, " ")
+			pkgsWithTargetRelease = []string{}
 		}
 
-		cmds = append(cmds, LogProgressCmd("Installing package: %s", pkgs[i]))
-		cmd := looper + cfg.paccmder.InstallCmd(pack)
+		cmds = append(cmds, LogProgressCmd("Installing package: %s", packageName))
+		cmd := looper + cfg.paccmder.InstallCmd(installArgs...)
 		cmds = append(cmds, cmd)
 	}
 
@@ -263,9 +282,15 @@ func (cfg *ubuntuCloudConfig) addRequiredPackages() {
 	for _, pack := range packages {
 		if config.SeriesRequiresCloudArchiveTools(cfg.series) && cfg.pacconfer.IsCloudArchivePackage(pack) {
 			// On precise, we need to pass a --target-release entry in
-			// pieces for it to work:
-			// TODO (aznashwan): figure out what the hell precise wants.
-			cfg.AddPackage(strings.Join(cfg.pacconfer.ApplyCloudArchiveTarget(pack), " "))
+			// pieces (as "packages") for it to work:
+			// --target-release, precise-updates/cloud-tools,
+			// package-name. All these 3 entries are needed so
+			// cloud-init 0.6.3 can generate the correct apt-get
+			// install command line for "package-name".
+			args := cfg.pacconfer.ApplyCloudArchiveTarget(pack)
+			for _, arg := range args {
+				cfg.AddPackage(arg)
+			}
 		} else {
 			cfg.AddPackage(pack)
 		}
diff --git a/container/lxc/initialisation_test.go b/container/lxc/initialisation_test.go
index 8fe96c1..d5a673c 100644
--- a/container/lxc/initialisation_test.go
+++ b/container/lxc/initialisation_test.go
@@ -50,8 +50,8 @@ func (s *InitialiserSuite) TestLTSSeriesPackages(c *gc.C) {
 	c.Assert(err, jc.ErrorIsNil)
 
 	c.Assert(s.calledCmds, gc.DeepEquals, []string{
-		paccmder.InstallCmd("--target-release precise-updates/cloud-tools lxc"),
-		paccmder.InstallCmd("--target-release precise-updates/cloud-tools cloud-image-utils"),
+		paccmder.InstallCmd("--target-release", "precise-updates/cloud-tools", "lxc"),
+		paccmder.InstallCmd("--target-release", "precise-updates/cloud-tools", "cloud-image-utils"),
 	})
 }