diff --git a/extensions/window-list/extension.js b/extensions/window-list/extension.js
index 9d21dedc..360d1ff9 100644
--- a/extensions/window-list/extension.js
+++ b/extensions/window-list/extension.js
@@ -21,7 +21,8 @@ const DND_ACTIVATE_TIMEOUT = 500;
 
 const GroupingMode = {
     NEVER: 0,
-    ALWAYS: 1
+    AUTO: 1,
+    ALWAYS: 2
 };
 
 
@@ -400,6 +401,20 @@ const WindowList = new Lang.Class({
                 let spacing = node.get_length('spacing');
                 this._windowList.layout_manager.spacing = spacing;
             }));
+        this._windowList.connect('notify::allocation', Lang.bind(this,
+            function() {
+                if (this._groupingMode != GroupingMode.AUTO || this._grouped)
+                    return;
+
+                let allocation = this._windowList.allocation;
+                let width = allocation.x2 - allocation.x1;
+                let [, natWidth] = this._windowList.get_preferred_width(-1);
+                if (width < natWidth) {
+                    this._grouped = true;
+                    Meta.later_add(Meta.LaterType.BEFORE_REDRAW,
+                                   Lang.bind(this, this._populateWindowList));
+                }
+            }));
 
         this._trayButton = new TrayButton();
         box.add(this._trayButton.actor);
@@ -475,13 +490,14 @@ const WindowList = new Lang.Class({
 
     _groupingModeChanged: function() {
         this._groupingMode = this._settings.get_enum('grouping-mode');
+        this._grouped = this._groupingMode == GroupingMode.ALWAYS;
         this._populateWindowList();
     },
 
     _populateWindowList: function() {
         this._windowList.destroy_all_children();
 
-        if (this._groupingMode == GroupingMode.NEVER) {
+        if (!this._grouped) {
             let windows = Meta.get_window_actors(global.screen);
             for (let i = 0; i < windows.length; i++)
                 this._onWindowAdded(null, windows[i].metaWindow);
@@ -514,7 +530,7 @@ const WindowList = new Lang.Class({
     },
 
     _onAppStateChanged: function(appSys, app) {
-        if (this._groupingMode != GroupingMode.ALWAYS)
+        if (!this._grouped)
             return;
 
         if (app.state == Shell.AppState.RUNNING)
@@ -545,7 +561,7 @@ const WindowList = new Lang.Class({
         if (!Shell.WindowTracker.get_default().is_window_interesting(win))
             return;
 
-        if (this._groupingMode != GroupingMode.NEVER)
+        if (this._grouped)
             return;
 
         let button = new WindowButton(win);
@@ -556,8 +572,14 @@ const WindowList = new Lang.Class({
     },
 
     _onWindowRemoved: function(ws, win) {
-        if (this._groupingMode != GroupingMode.NEVER)
+        if (this._grouped) {
+            if (this._groupingMode == GroupingMode.AUTO) {
+                this._grouped = false;
+                this._populateWindowList();
+            }
+
             return;
+        }
 
         let children = this._windowList.get_children();
         for (let i = 0; i < children.length; i++) {
diff --git a/extensions/window-list/org.gnome.shell.extensions.window-list.gschema.xml.in b/extensions/window-list/org.gnome.shell.extensions.window-list.gschema.xml.in
index 6930d2ff..d5bbdf4e 100644
--- a/extensions/window-list/org.gnome.shell.extensions.window-list.gschema.xml.in
+++ b/extensions/window-list/org.gnome.shell.extensions.window-list.gschema.xml.in
@@ -1,7 +1,8 @@
 <schemalist gettext-domain="gnome-shell-extensions">
   <enum id="org.gnome.shell.extensions.window-list.GroupingMode">
     <value value="0" nick="never"/>
-    <value value="1" nick="always"/>
+    <value value="1" nick="auto"/>
+    <value value="2" nick="always"/>
   </enum>
   <schema id="org.gnome.shell.extensions.window-list"
           path="/org/gnome/shell/extensions/window-list/">
@@ -11,7 +12,7 @@
       <_summary>When to group windows</_summary>
       <_description>
         Decides when to group windows from the same application on the
-        window list. Possible values are "never" and "always".
+        window list. Possible values are "never", "auto" and "always".
       </_description>
     </key>
   </schema>
diff --git a/extensions/window-list/prefs.js b/extensions/window-list/prefs.js
index 55045be6..3db09c30 100644
--- a/extensions/window-list/prefs.js
+++ b/extensions/window-list/prefs.js
@@ -47,6 +47,7 @@ const WindowListPrefsWidget = new GObject.Class({
 
         let modeLabels = {
             'never': _("Never group windows"),
+            'auto': _("Group windows when space is limited"),
             'always': _("Always group windows")
         };