diff --git a/src/ng/directive/select.js b/src/ng/directive/select.js
index 886aae20306a..91585934445d 100644
--- a/src/ng/directive/select.js
+++ b/src/ng/directive/select.js
@@ -405,21 +405,35 @@ var selectDirective = ['$compile', '$parse', function($compile,   $parse) {
                   value = valueFn(scope, locals);
                 }
               }
-              // Update the null option's selected property here so $render cleans it up correctly
-              if (optionGroupsCache[0].length > 1) {
-                if (optionGroupsCache[0][1].id !== key) {
-                  optionGroupsCache[0][1].selected = false;
-                }
-              }
             }
             ctrl.$setViewValue(value);
+            render();
           });
         });
 
         ctrl.$render = render;
 
-        // TODO(vojta): can't we optimize this ?
-        scope.$watch(render);
+        scope.$watch(valuesFn, render, true);
+        scope.$watch(getSelectedSet, render, true);
+
+        function getSelectedSet() {
+          var selectedSet = false;
+          if (multiple) {
+            var modelValue = ctrl.$modelValue;
+            if (trackFn && isArray(modelValue)) {
+              selectedSet = new HashMap([]);
+              var locals = {};
+              for (var trackIndex = 0; trackIndex < modelValue.length; trackIndex++) {
+                locals[valueName] = modelValue[trackIndex];
+                selectedSet.put(trackFn(scope, locals), modelValue[trackIndex]);
+              }
+            } else {
+              selectedSet = new HashMap(modelValue);
+            }
+          }
+          return selectedSet;
+        }
+
 
         function render() {
               // Temporary location for the option groups before we render them
@@ -437,22 +451,11 @@ var selectDirective = ['$compile', '$parse', function($compile,   $parse) {
               groupIndex, index,
               locals = {},
               selected,
-              selectedSet = false, // nothing is selected yet
+              selectedSet = getSelectedSet(),
               lastElement,
               element,
               label;
 
-          if (multiple) {
-            if (trackFn && isArray(modelValue)) {
-              selectedSet = new HashMap([]);
-              for (var trackIndex = 0; trackIndex < modelValue.length; trackIndex++) {
-                locals[valueName] = modelValue[trackIndex];
-                selectedSet.put(trackFn(scope, locals), modelValue[trackIndex]);
-              }
-            } else {
-              selectedSet = new HashMap(modelValue);
-            }
-          }
 
           // We now build up the list of options we need (we merge later)
           for (index = 0; length = keys.length, index < length; index++) {
@@ -548,7 +551,7 @@ var selectDirective = ['$compile', '$parse', function($compile,   $parse) {
                   lastElement.val(existingOption.id = option.id);
                 }
                 // lastElement.prop('selected') provided by jQuery has side-effects
-                if (existingOption.selected !== option.selected) {
+                if (lastElement[0].selected !== option.selected) {
                   lastElement.prop('selected', (existingOption.selected = option.selected));
                   if (msie) {
                     // See #7692
diff --git a/test/ng/directive/selectSpec.js b/test/ng/directive/selectSpec.js
index 9ce01704c136..3261605ffbde 100644
--- a/test/ng/directive/selectSpec.js
+++ b/test/ng/directive/selectSpec.js
@@ -735,6 +735,8 @@ describe('select', function() {
 
     it('should not update selected property of an option element on digest with no change event',
         function() {
+      // ng-options="value.name for value in values"
+      // ng-model="selected"
       createSingleSelect();
 
       scope.$apply(function() {
@@ -743,6 +745,11 @@ describe('select', function() {
       });
 
       var options = element.find('option');
+
+      expect(scope.selected).toEqual({ name: 'A' });
+      expect(options.eq(0).prop('selected')).toBe(true);
+      expect(options.eq(1).prop('selected')).toBe(false);
+
       var optionToSelect = options.eq(1);
 
       expect(optionToSelect.text()).toBe('B');
@@ -1148,8 +1155,73 @@ describe('select', function() {
         browserTrigger(element, 'change');
         expect(scope.selected).toEqual(null);
       });
+
+
+      // Regression https://github.com/angular/angular.js/issues/7855
+      it('should update the model with ng-change', function() {
+        createSelect({
+          'ng-change':'change()',
+          'ng-model':'selected',
+          'ng-options':'value for value in values'
+        });
+
+        scope.$apply(function() {
+          scope.values = ['A', 'B'];
+          scope.selected = 'A';
+        });
+
+        scope.change = function() {
+          scope.selected = 'A';
+        };
+
+        element.find('option')[1].selected = true;
+
+        browserTrigger(element, 'change');
+        expect(element.find('option')[0].selected).toBeTruthy();
+        expect(scope.selected).toEqual('A');
+      });
     });
 
+    describe('disabled blank', function() {
+      it('should select disabled blank by default', function() {
+        var html = '<select ng-model="someModel" ng-options="c for c in choices">' +
+                     '<option value="" disabled>Choose One</option>' +
+                   '</select>';
+        scope.$apply(function() {
+          scope.choices = ['A', 'B', 'C'];
+        });
+
+        compile(html);
+
+        var options = element.find('option');
+        var optionToSelect = options.eq(0);
+        expect(optionToSelect.text()).toBe('Choose One');
+        expect(optionToSelect.prop('selected')).toBe(true);
+        expect(element[0].value).toBe('');
+
+        dealoc(element);
+      });
+
+
+      it('should select disabled blank by default when select is required', function() {
+        var html = '<select ng-model="someModel" ng-options="c for c in choices" required>' +
+                     '<option value="" disabled>Choose One</option>' +
+                   '</select>';
+        scope.$apply(function() {
+          scope.choices = ['A', 'B', 'C'];
+        });
+
+        compile(html);
+
+        var options = element.find('option');
+        var optionToSelect = options.eq(0);
+        expect(optionToSelect.text()).toBe('Choose One');
+        expect(optionToSelect.prop('selected')).toBe(true);
+        expect(element[0].value).toBe('');
+
+        dealoc(element);
+      });
+    });
 
     describe('select-many', function() {
 
@@ -1197,6 +1269,7 @@ describe('select', function() {
         expect(scope.selected).toEqual([scope.values[0]]);
       });
 
+
       it('should select from object', function() {
         createSelect({
           'ng-model':'selected',