diff --git a/src/datepicker/datepicker.js b/src/datepicker/datepicker.js
index ef3a5c4b52..4204d95dd3 100644
--- a/src/datepicker/datepicker.js
+++ b/src/datepicker/datepicker.js
@@ -145,7 +145,7 @@ angular.module('ui.bootstrap.datepicker', ['ui.bootstrap.dateparser', 'ui.bootst
     model = dateParser.fromTimezone(model, ngModelOptions.timezone);
     var dt = {
       date: date,
-      label: dateFilter(date, format),
+      label: dateFilter(date, format.replace(/d!/, 'dd')).replace(/M!/, 'MM'),
       selected: model && this.compare(date, model) === 0,
       disabled: this.isDisabled(date),
       current: this.compare(date, new Date()) === 0,
@@ -729,6 +729,9 @@ function(scope, element, attrs, $compile, $parse, $document, $rootScope, $positi
           return value;
         }
         scope.date = dateParser.fromTimezone(value, ngModelOptions.timezone);
+        dateFormat = dateFormat.replace(/M!/, 'MM')
+          .replace(/d!/, 'dd');
+
         return dateFilter(scope.date, dateFormat);
       });
     } else {
diff --git a/src/datepicker/test/datepicker.spec.js b/src/datepicker/test/datepicker.spec.js
index 44376dae1f..11eb8c521b 100644
--- a/src/datepicker/test/datepicker.spec.js
+++ b/src/datepicker/test/datepicker.spec.js
@@ -1948,6 +1948,30 @@ describe('datepicker', function() {
         });
       });
 
+      describe('custom format with optional leading zeroes', function() {
+        beforeEach(inject(function() {
+          var wrapElement = $compile('<div><input ng-model="date" uib-datepicker-popup="d!-M!-yyyy" is-open="true"><div>')($rootScope);
+          $rootScope.$digest();
+          assignElements(wrapElement);
+        }));
+
+        it('to display the correct value in input', function() {
+          expect(inputEl.val()).toBe('30-09-2010');
+        });
+
+        it('updates the input when a day is clicked', function() {
+          clickOption(10);
+          expect(inputEl.val()).toBe('08-09-2010');
+          expect($rootScope.date).toEqual(new Date('September 8, 2010 15:30:00'));
+        });
+
+        it('updates the input correctly when model changes', function() {
+          $rootScope.date = new Date('December 25, 1983 10:00:00');
+          $rootScope.$digest();
+          expect(inputEl.val()).toBe('25-12-1983');
+        });
+      });
+
       describe('dynamic custom format', function() {
         beforeEach(inject(function() {
           $rootScope.format = 'dd-MMMM-yyyy';