diff --git a/src/stateDirectives.js b/src/stateDirectives.js
index 38078d26d..1a9a2607b 100644
--- a/src/stateDirectives.js
+++ b/src/stateDirectives.js
@@ -13,6 +13,7 @@ function $StateRefDirective($state) {
       var params = null, url = null;
       var isForm = element[0].nodeName === "FORM";
       var attr = isForm ? "action" : "href", nav = true;
+      var allowEmptyState = true; // Use attribute to set this?
 
       var update = function(newVal) {
         if (newVal) params = newVal;
@@ -20,19 +21,28 @@ function $StateRefDirective($state) {
 
         var newHref = $state.href(ref.state, params);
 
-        if (!newHref) {
+        if (!newHref && !allowEmptyState) {
           nav = false;
           return false;
         }
         element[0][attr] = newHref;
       };
-
-      if (ref.paramExpr) {
-        scope.$watch(ref.paramExpr, function(newVal, oldVal) {
-          if (newVal !== oldVal) update(newVal);
-        }, true);
-        params = scope.$eval(ref.paramExpr);
-      }
+      
+      attrs.$observe('uiSref', function(newVal, oldVal) {
+        if (newVal !== oldVal) {
+          ref = parseStateRef(attrs.uiSref);
+          params = scope.$eval(ref.paramExpr);
+          update(params);
+          
+          if (ref) {
+            scope.$watch(ref.paramExpr, function(newVal, oldVal) {
+              if (newVal !== oldVal) update(newVal);
+            }, true);
+            params = scope.$eval(ref.paramExpr);
+          }
+        }
+      }, true);
+      
       update();
 
       if (isForm) return;
diff --git a/test/stateDirectivesSpec.js b/test/stateDirectivesSpec.js
index 2a31b3c20..ed4b46953 100644
--- a/test/stateDirectivesSpec.js
+++ b/test/stateDirectivesSpec.js
@@ -11,7 +11,10 @@ describe('uiStateRef', function() {
       url: '/contacts'
     }).state('contacts.item', {
       url: '/:id'
-    }).state('contacts.item.detail', {});
+    }).state('contacts.item.detail', {
+    }).state('contacts.item.more', {
+        url: '/more'
+    });
   }));
 
   beforeEach(inject(function($document) {
@@ -51,8 +54,9 @@ describe('uiStateRef', function() {
   describe('links', function() {
 
     beforeEach(inject(function($rootScope, $compile) {
-      el = angular.element('<a ui-sref="contacts.item.detail({ id: contact.id })">Details</a>');
+      el = angular.element('<a ui-sref="{{state}}({ id: contact.id })">Details</a>');
       scope = $rootScope;
+      scope.state = 'contacts.item.detail';
       scope.contact = { id: 5 };
       scope.$apply();
 
@@ -64,6 +68,16 @@ describe('uiStateRef', function() {
       expect(el.attr('href')).toBe('#/contacts/5');
     });
 
+    it('should update the href when the state changes', function() {
+      expect(el.attr('href')).toBe('#/contacts/5');
+      scope.state = 'contacts.item.more';
+      scope.$apply();
+      expect(el.attr('href')).toBe('#/contacts/5/more');
+      scope.state = 'contacts.item.detail';
+      scope.$apply();
+      expect(el.attr('href')).toBe('#/contacts/5');
+    });
+
     it('should update the href when parameters change', function() {
       expect(el.attr('href')).toBe('#/contacts/5');
       scope.contact.id = 6;