--- virtualenv.py.orig	2008-07-10 14:07:57.000000000 +1000
+++ virtualenv.py	2008-07-10 14:11:20.000000000 +1000
@@ -531,7 +531,7 @@
         logger.notify('Please make sure you remove any previous custom paths from '
                       'your %s file.' % pydistutils)
 
-    install_distutils(lib_dir)
+    install_distutils(lib_dir, home_dir)
 
     install_setuptools(py_executable)
 
@@ -548,11 +548,12 @@
         content = content.replace('__VIRTUAL_NAME__', os.path.basename(os.path.abspath(home_dir)))
         writefile(os.path.join(bin_dir, name), content)
 
-def install_distutils(lib_dir):
+def install_distutils(lib_dir, home_dir):
     distutils_path = os.path.join(lib_dir, 'distutils')
     mkdir(distutils_path)
+    distutils_cfg = DISTUTILS_CFG + "\n[install]\nprefix=%s\noptimize=0\n" % home_dir
     writefile(os.path.join(distutils_path, '__init__.py'), DISTUTILS_INIT)
-    writefile(os.path.join(distutils_path, 'distutils.cfg'), DISTUTILS_CFG, overwrite=False)
+    writefile(os.path.join(distutils_path, 'distutils.cfg'), distutils_cfg, overwrite=False)
 
 def fix_lib64(lib_dir):
     """