Index: apps/app_queue.c
===================================================================
--- apps/app_queue.c	(revision 137818)
+++ apps/app_queue.c	(working copy)
@@ -2314,6 +2314,14 @@
 			ast_debug(1, "Trying '%s' with metric %d\n", best->interface, best->metric);
 			ret = ring_entry(qe, best, busies);
 		}
+		
+		/* If we have timed out, break out */
+		if (qe->expire && (time(NULL) >= qe->expire)) {
+			if (option_debug)
+				ast_log(LOG_DEBUG, "Queue timed out while ringing members.\n");
+			ret = 0;
+			break;
+		}
 	}
 
 	return ret;
@@ -3407,10 +3415,22 @@
 		}
 	}
 
-	if (qe->expire && (!qe->parent->timeout || (qe->parent->timeoutpriority == TIMEOUT_PRIORITY_APP && (qe->expire - now) <= qe->parent->timeout)))
-		to = (qe->expire - now) * 1000;
-	else
-		to = (qe->parent->timeout) ? qe->parent->timeout * 1000 : -1;
+	if (qe->parent->timeoutpriority == TIMEOUT_PRIORITY_APP) {
+		/* Application arguments have higher timeout priority (behaviour for <=1.6) */
+		if (qe->expire && (!qe->parent->timeout || (qe->expire - now) <= qe->parent->timeout))
+			to = (qe->expire - now) * 1000;
+		else
+			to = (qe->parent->timeout) ? qe->parent->timeout * 1000 : -1;
+	} else {
+		/* Config timeout is higher priority thatn application timeout */
+		if (qe->expire && qe->expire<=now) {
+			to = 0;
+		} else if (qe->parent->timeout) {
+			to = qe->parent->timeout * 1000;
+		} else {
+			to = -1;
+		}
+	}
 	orig = to;
 	++qe->pending;
 	ao2_unlock(qe->parent);
Index: configs/queues.conf.sample
===================================================================
--- configs/queues.conf.sample	(revision 137818)
+++ configs/queues.conf.sample	(working copy)
@@ -148,12 +148,20 @@
 ; Queue application is more important. In the scenario above, timeoutpriority=app
 ; would result in the second member's phone ringing for 1 second.
 ;
-; There are a few exceptions to the priority rules. For instance, if the configuration
-; file timeout is set to 0, but the application argument timeout is non-zero, then the
-; timeoutpriority is ignored and the application argument is used as the timeout. Furthermore,
-; if no application argument timeout is specified, then the timeoutpriority option is
-; ignored and the configuration file timeout is always used when calling queue members.
+; There are a few exceptions to the priority rules. For instance, if timeoutpriority=appp
+; and the configuration file timeout is set to 0, but the application argument timeout is
+; non-zero, then the timeoutpriority is ignored and the application argument is used as
+; the timeout. Furthermore, if no application argument timeout is specified, then the
+; timeoutpriority option is ignored and the configuration file timeout is always used 
+; when calling queue members.
 ;
+; In timeoutpriority=conf mode however timeout specified in config file will take higher
+; priority than timeout in application arguments, so if config file has timeout 0, each
+; queue member will be called indefineately and application timeout will be checked only
+; after this call attempt. This is useful for having queue members with custom timeouts
+; specified within Dial application of Local channel, and allows handling NO ANSWER which
+; would otherwise be interrupted by queue destroying child channel on timeout.
+;
 ; The default value for timeoutpriority is "app" since this was how previous versions of
 ; Asterisk behaved.
 ;