diff --git a/src/vs/editor/common/config/commonEditorConfig.ts b/src/vs/editor/common/config/commonEditorConfig.ts
index b36b57d5ce67c297e4bba7c38492b1cdc498e130..d75140b5201c9f0e13dea26d06dc7978c94a1181 100644
--- a/src/vs/editor/common/config/commonEditorConfig.ts
+++ b/src/vs/editor/common/config/commonEditorConfig.ts
@@ -505,7 +505,7 @@ export class CommonEditorConfiguration extends EventEmitter implements EditorCom
 			tabSizeIsAuto: false,
 			tabSize: 4,
 			insertSpacesIsAuto: false,
-			insertSpaces: false
+			insertSpaces: true
 		};
 
 		if (opts.tabSize === 'auto') {
diff --git a/src/vs/editor/common/model/textModel.ts b/src/vs/editor/common/model/textModel.ts
index 46718fbec8cb1a55ed4001747cc32f5fff3807c7..027dcf91ee7393b83a5f5dd24bd97640c141b1c9 100644
--- a/src/vs/editor/common/model/textModel.ts
+++ b/src/vs/editor/common/model/textModel.ts
@@ -486,11 +486,11 @@ export class TextModel extends OrderGuaranteeEventEmitter implements EditorCommo
 			linesIndentedWithSpaces += (absoluteSpaceCounts[i] || 0);
 		}
 
-		// Give preference to tabs over spaces (when evidence is the same)
+		// Give preference to spaces over tabs (when evidence is the same)
 		// or when there are not enough clues (too little indentation in the file)
 		if (linesIndentedWithTabs >= linesIndentedWithSpaces) {
 			return {
-				insertSpaces: false,
+				insertSpaces: true,
 				tabSize: defaultTabSize
 			};
 		}
@@ -498,7 +498,7 @@ export class TextModel extends OrderGuaranteeEventEmitter implements EditorCommo
 		if (linesWithIndentationCount < 6 && linesIndentedWithTabs > 0) {
 			// Making a guess with 6 indented lines, of which tabs are used besides spaces is very difficult
 			return {
-				insertSpaces: false,
+				insertSpaces: true,
 				tabSize: defaultTabSize
 			};
 		}
diff --git a/src/vs/editor/test/common/model/textModel.test.ts b/src/vs/editor/test/common/model/textModel.test.ts
index 463ad75fc3ed6d226543c5a69723146a5f6e6434..cd6b8e86c9e09bdfe061eae030caf43d7ba0ae68 100644
--- a/src/vs/editor/test/common/model/textModel.test.ts
+++ b/src/vs/editor/test/common/model/textModel.test.ts
@@ -11,14 +11,14 @@ import Position = require('vs/editor/common/core/position');
 
 function testGuessIndentation(expectedInsertSpaces:boolean, expectedTabSize:number, text:string[], msg?:string): void {
 	var m = new TextModel.TextModel([], TextModel.TextModel.toRawText(text.join('\n')));
-	var r = m.guessIndentation(1773);
+	var r = m.guessIndentation(1337);
 	m.dispose();
 
 	assert.equal(r.insertSpaces, expectedInsertSpaces, msg);
 	if (expectedInsertSpaces) {
 		assert.equal(r.tabSize, expectedTabSize, msg);
 	} else {
-		assert.equal(r.tabSize, 1773, msg);
+		assert.equal(r.tabSize, 1337, msg);
 	}
 }
 
@@ -64,26 +64,26 @@ suite('Editor Model - TextModel', () => {
 	test('guess indentation 1', () => {
 
 		// Defaults to tabs
-		guessesTabs([
+		guessesSpaces(1337, [
 			'x',
 			'x'
 		]);
 
 		// Gives preference to tabs
-		guessesTabs([
+		guessesSpaces(1337, [
 			'\tx',
 			'x'
 		]);
-		guessesTabs([
+		guessesSpaces(1337, [
 			'\tx',
 			' x'
 		]);
-		guessesTabs([
+		guessesSpaces(1337, [
 			'\tx',
 			'  x'
 		]);
 
-		guessesTabs([
+		guessesSpaces(1337, [
 			'x',
 			' x',
 			' x',
@@ -93,7 +93,7 @@ suite('Editor Model - TextModel', () => {
 			' x',
 			' x'
 		], '7x1 - 1 space is never guessed as an indentation');
-		guessesTabs([
+		guessesSpaces(1337, [
 			'',
 			'  ',
 			'    ',