diff --git a/desktop-shell/shell.c b/desktop-shell/shell.c
index ec72287..d307e48 100644
--- a/desktop-shell/shell.c
+++ b/desktop-shell/shell.c
@@ -4124,13 +4124,34 @@
 	shell_fade_startup(shell);
 }
 
+static void
+desktop_shell_set_panel_position(struct wl_client *client,
+				 struct wl_resource *resource,
+				 uint32_t position)
+{
+	struct desktop_shell *shell = wl_resource_get_user_data(resource);
+
+	if (position != DESKTOP_SHELL_PANEL_POSITION_TOP &&
+	    position != DESKTOP_SHELL_PANEL_POSITION_BOTTOM &&
+	    position != DESKTOP_SHELL_PANEL_POSITION_LEFT &&
+	    position != DESKTOP_SHELL_PANEL_POSITION_RIGHT) {
+		wl_resource_post_error(resource,
+				       DESKTOP_SHELL_ERROR_INVALID_ARGUMENT,
+				       "bad position argument");
+		return;
+	}
+
+	shell->panel_position = position;
+}
+
 static const struct desktop_shell_interface desktop_shell_implementation = {
 	desktop_shell_set_background,
 	desktop_shell_set_panel,
 	desktop_shell_set_lock_surface,
 	desktop_shell_unlock,
 	desktop_shell_set_grab_surface,
-	desktop_shell_desktop_ready
+	desktop_shell_desktop_ready,
+	desktop_shell_set_panel_position
 };
 
 static enum shell_surface_type
@@ -5344,7 +5365,7 @@
 	struct wl_resource *resource;
 
 	resource = wl_resource_create(client, &desktop_shell_interface,
-				      MIN(version, 2), id);
+				      MIN(version, 3), id);
 
 	if (client == shell->child.client) {
 		wl_resource_set_implementation(resource,
@@ -6265,7 +6286,7 @@
 		return -1;
 
 	if (wl_global_create(ec->wl_display,
-			     &desktop_shell_interface, 2,
+			     &desktop_shell_interface, 3,
 			     shell, bind_desktop_shell) == NULL)
 		return -1;
 
@@ -6279,6 +6300,8 @@
 
 	shell->child.deathstamp = weston_compositor_get_time();
 
+	shell->panel_position = DESKTOP_SHELL_PANEL_POSITION_TOP;
+
 	setup_output_destroy_handler(ec, shell);
 
 	loop = wl_display_get_event_loop(ec->wl_display);
diff --git a/desktop-shell/shell.h b/desktop-shell/shell.h
index e994cdb..c6ea328 100644
--- a/desktop-shell/shell.h
+++ b/desktop-shell/shell.h
@@ -26,6 +26,8 @@
 
 #include "compositor.h"
 
+#include "desktop-shell-server-protocol.h"
+
 enum animation_type {
 	ANIMATION_NONE,
 
@@ -205,6 +207,8 @@
 	struct wl_listener output_move_listener;
 	struct wl_list output_list;
 
+	enum desktop_shell_panel_position panel_position;
+
 	char *client;
 };
 
diff --git a/protocol/desktop-shell.xml b/protocol/desktop-shell.xml
index fdcb17b..fb0b748 100644
--- a/protocol/desktop-shell.xml
+++ b/protocol/desktop-shell.xml
@@ -1,6 +1,6 @@
 <protocol name="desktop">
 
-  <interface name="desktop_shell" version="2">
+  <interface name="desktop_shell" version="3">
     <description summary="create desktop widgets and helpers">
       Traditional user interfaces can rely on this interface to define the
       foundations of typical desktops. Currently it's possible to set up
@@ -94,6 +94,29 @@
       </description>
     </request>
 
+    <!-- Version 3 additions -->
+
+    <enum name="panel_position">
+      <entry name="top" value="0"/>
+      <entry name="bottom" value="1"/>
+      <entry name="left" value="2"/>
+      <entry name="right" value="3"/>
+    </enum>
+
+    <enum name="error">
+      <entry name="invalid_argument" value="0"
+        summary="an invalid argument was provided in a request"/>
+    </enum>
+
+    <request name="set_panel_position" since="3">
+      <arg name="position" type="uint"/>
+      <description summary="set panel position">
+        Tell the shell which side of the screen the panel is
+        located. This is so that new windows do not overlap the panel
+        and maximized windows maximize properly.
+      </description>
+    </request>
+
   </interface>
 
   <interface name="screensaver" version="1">