diff --git a/idea/idea-analysis/src/org/jetbrains/jet/plugin/caches/resolve/KotlinCacheService.kt b/idea/idea-analysis/src/org/jetbrains/jet/plugin/caches/resolve/KotlinCacheService.kt
index afffc383ef4..142ae1e23eb 100644
--- a/idea/idea-analysis/src/org/jetbrains/jet/plugin/caches/resolve/KotlinCacheService.kt
+++ b/idea/idea-analysis/src/org/jetbrains/jet/plugin/caches/resolve/KotlinCacheService.kt
@@ -90,7 +90,9 @@ public class KotlinCacheService(val project: Project) {
                 project, globalResolveSessionProvider(platform,
                                                       logProcessCanceled = true,
                                                       moduleFilter = { it.isLibraryClasses() },
-                                                      dependencies = listOf(ProjectRootModificationTracker.getInstance(project)))
+                                                      dependencies = listOf(
+                                                              LibraryModificationTracker.getInstance(project),
+                                                              ProjectRootModificationTracker.getInstance(project)))
         )
 
         val modulesCache = KotlinResolveCache(
@@ -124,7 +126,10 @@ public class KotlinCacheService(val project: Project) {
                 }
                 else -> {
                     if (syntheticFileModule.isLibraryClasses()) {
-                        LOG.error("Creating cache with synthetic file ($file) in classes of library $syntheticFileModule")
+                        //NOTE: this code should not be called for sdk or library classes
+                        // currently the only known scenario is when we cannot determine that file is a library source
+                        // (file under both classes and sources root)
+                        LOG.warn("Creating cache with synthetic file ($file) in classes of library $syntheticFileModule")
                     }
                     KotlinResolveCache(
                             project,
diff --git a/idea/idea-analysis/src/org/jetbrains/jet/plugin/caches/resolve/LibraryModificationTracker.kt b/idea/idea-analysis/src/org/jetbrains/jet/plugin/caches/resolve/LibraryModificationTracker.kt
new file mode 100644
index 00000000000..41ac99e4cbc
--- /dev/null
+++ b/idea/idea-analysis/src/org/jetbrains/jet/plugin/caches/resolve/LibraryModificationTracker.kt
@@ -0,0 +1,55 @@
+/*
+ * Copyright 2010-2014 JetBrains s.r.o.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+package org.jetbrains.jet.plugin.caches.resolve
+
+import com.intellij.openapi.util.SimpleModificationTracker
+import com.intellij.openapi.project.Project
+import com.intellij.openapi.components.ServiceManager
+import com.intellij.openapi.vfs.VirtualFileManager
+import com.intellij.openapi.vfs.impl.BulkVirtualFileListenerAdapter
+import com.intellij.openapi.vfs.VirtualFileAdapter
+import com.intellij.openapi.vfs.VirtualFileEvent
+import com.intellij.openapi.vfs.VirtualFileMoveEvent
+import com.intellij.openapi.roots.ProjectFileIndex
+import kotlin.platform.platformStatic
+
+class LibraryModificationTracker(project: Project) : SimpleModificationTracker() {
+    class object {
+        platformStatic fun getInstance(project: Project) = ServiceManager.getService(project, javaClass<LibraryModificationTracker>())!!
+    }
+
+    {
+        val connection = project.getMessageBus().connect()
+        connection.subscribe(VirtualFileManager.VFS_CHANGES, BulkVirtualFileListenerAdapter(
+                object : VirtualFileAdapter() {
+                    override fun fileCreated(event: VirtualFileEvent) = processEvent(event)
+                    override fun beforeFileMovement(event: VirtualFileMoveEvent) = processEvent(event)
+                    override fun beforeContentsChange(event: VirtualFileEvent) = processEvent(event)
+                    override fun beforeFileDeletion(event: VirtualFileEvent) = processEvent(event)
+                }
+        ))
+    }
+
+    val projectFileIndex = ProjectFileIndex.SERVICE.getInstance(project)
+
+    fun processEvent(event: VirtualFileEvent) {
+        if (projectFileIndex.isInLibraryClasses(event.getFile())) {
+            incModificationCount()
+        }
+    }
+}
+
diff --git a/idea/src/META-INF/plugin.xml b/idea/src/META-INF/plugin.xml
index f5e3a64515b..f1a091bd97f 100644
--- a/idea/src/META-INF/plugin.xml
+++ b/idea/src/META-INF/plugin.xml
@@ -166,6 +166,9 @@
     <projectService serviceInterface="org.jetbrains.jet.plugin.stubindex.SubpackagesIndexService"
                     serviceImplementation="org.jetbrains.jet.plugin.stubindex.SubpackagesIndexService"/>
 
+    <projectService serviceInterface="org.jetbrains.jet.plugin.caches.resolve.LibraryModificationTracker"
+                    serviceImplementation="org.jetbrains.jet.plugin.caches.resolve.LibraryModificationTracker"/>
+
     <errorHandler implementation="org.jetbrains.jet.plugin.reporter.KotlinReportSubmitter"/>
 
     <internalFileTemplate name="Kotlin File"/>