diff --git a/utils/squashfs-tools/Config.in b/utils/squashfs-tools/Config.in
index f02c0ba3f..86996e6bd 100644
--- a/utils/squashfs-tools/Config.in
+++ b/utils/squashfs-tools/Config.in
@@ -1,11 +1,11 @@
-if PACKAGE_squashfs-tools
+if PACKAGE_squashfs-tools-mksquashfs || PACKAGE_squashfs-tools-unsquashfs
 
-config SQUASHFS_TOOLS_MKSQUASHFS
-	bool "Install mksquashfs"
+config SQUASHFS_TOOLS_LZO_SUPPORT
+	bool "Enable LZO support"
 	default y
 
-config SQUASHFS_TOOLS_UNSQUASHFS
-	bool "Install unsquashfs"
+config SQUASHFS_TOOLS_XZ_SUPPORT
+	bool "Enable XZ support"
 	default y
 
 endif
diff --git a/utils/squashfs-tools/Makefile b/utils/squashfs-tools/Makefile
index cf8f0b113..c3ad0f033 100644
--- a/utils/squashfs-tools/Makefile
+++ b/utils/squashfs-tools/Makefile
@@ -9,49 +9,74 @@ include $(TOPDIR)/rules.mk
 
 PKG_NAME:=squashfs-tools
 PKG_VERSION:=4.2
-PKG_RELEASE:=1
+PKG_RELEASE:=2
 
 PKG_SOURCE:=squashfs$(PKG_VERSION).tar.gz
 PKG_SOURCE_URL:=@SF/squashfs
 PKG_MD5SUM:=1b7a781fb4cf8938842279bd3e8ee852
+
 PKG_CAT:=zcat
+PKG_BUILD_PARALLEL:=1
 
 PKG_BUILD_DIR:=$(BUILD_DIR)/squashfs$(PKG_VERSION)
 
 include $(INCLUDE_DIR)/package.mk
 
-define Package/squashfs-tools
+define Package/squashfs-tools/Default
   SECTION:=utils
   CATEGORY:=Utilities
   TITLE:=squashfs-tools
-  DEPENDS+= +libpthread +zlib
-  MENU:=1
+  DEPENDS += +libpthread +zlib \
+	+SQUASHFS_TOOLS_LZO_SUPPORT:liblzo \
+	+SQUASHFS_TOOLS_XZ_SUPPORT:liblzma
 endef
 
-define Package/squashfs-tools/config
+define Package/squashfs-tools-mksquashfs
+  $(call Package/squashfs-tools/Default)
+  TITLE+= mksquashfs
+endef
+
+define Package/squashfs-tools-unsquashfs
+  $(call Package/squashfs-tools/Default)
+  TITLE+= unsquashfs
+endef
+
+define Package/squashfs-tools-unsquashfs/config
 	source "$(SOURCE)/Config.in"
 endef
 
 define Build/Configure
 endef
 
+SQUASHFS_TOOLS_CONFIG := \
+	'XATTR_SUPPORT='
+
+ifneq ($(CONFIG_SQUASHFS_TOOLS_XZ_SUPPORT),)
+SQUASHFS_TOOLS_CONFIG += 'XZ_SUPPORT=1'
+endif
+
+ifneq ($(CONFIG_SQUASHFS_TOOLS_LZO_SUPPORT),)
+SQUASHFS_TOOLS_CONFIG += 'LZO_SUPPORT=1'
+endif
+
 define Build/Compile
 	$(MAKE) -C $(PKG_BUILD_DIR)/squashfs-tools \
 		CC="$(TARGET_CC)" \
 		EXTRA_CFLAGS="$(TARGET_CFLAGS)" \
 		EXTRA_LDFLAGS="$(TARGET_LDFLAGS)" \
-		XATTR_SUPPORT= \
+		$(SQUASHFS_TOOLS_CONFIG) \
 		mksquashfs unsquashfs
 endef
 
-define Package/squashfs-tools/install
+define Package/squashfs-tools-mksquashfs/install
 	$(INSTALL_DIR) $(1)/usr/sbin
-ifeq ($(CONFIG_SQUASHFS_TOOLS_MKSQUASHFS),y)
 	$(INSTALL_BIN) $(PKG_BUILD_DIR)/squashfs-tools/mksquashfs $(1)/usr/sbin/mksquashfs
-endif
-ifeq ($(CONFIG_SQUASHFS_TOOLS_UNSQUASHFS),y)
-	$(INSTALL_BIN) $(PKG_BUILD_DIR)/squashfs-tools/unsquashfs $(1)/usr/sbin/unsquashfs
-endif
 endef
 
-$(eval $(call BuildPackage,squashfs-tools))
+define Package/squashfs-tools-unsquashfs/install
+	$(INSTALL_DIR) $(1)/usr/sbin
+	$(INSTALL_BIN) $(PKG_BUILD_DIR)/squashfs-tools/unsquashfs $(1)/usr/sbin/unsquashfs
+endef
+
+$(eval $(call BuildPackage,squashfs-tools-mksquashfs))
+$(eval $(call BuildPackage,squashfs-tools-unsquashfs))