diff --git a/src/cram.c b/src/cram.c
index 8774ceb..2c150f0 100644
--- a/src/cram.c
+++ b/src/cram.c
@@ -297,39 +297,86 @@ void Cram_Internal_PlaceRect(RectPackContext *context, Rect *rect, int32_t freeR
 	context->freeRectangleCount -= 1;
 
 	/* now we maybe have new free rectangles! */
+	/* NOTE: free rectangles can overlap. */
 
-	/* Left side */
-	if (rect->x > freeRect.x && rect->x < freeRect.x + freeRect.w)
+	if (rect->y < freeRect.y + freeRect.h && rect->y + rect->h > freeRect.y)
 	{
-		newRect = freeRect;
-		newRect.w = rect->x - freeRect.x;
-		Cram_Internal_AddFreeRect(context, newRect);
+		/* Left side */
+		if (rect->x > freeRect.x && rect->x < freeRect.x + freeRect.w)
+		{
+			newRect = freeRect;
+			newRect.w = rect->x - freeRect.x;
+			Cram_Internal_AddFreeRect(context, newRect);
+		}
+
+		/* Right side */
+		if (rect->x + rect->w < freeRect.x + freeRect.w)
+		{
+			newRect = freeRect;
+			newRect.x = rect->x + rect->w;
+			newRect.w = freeRect.x + freeRect.w - (rect->x + rect->w);
+			Cram_Internal_AddFreeRect(context, newRect);
+		}
 	}
 
-	/* Right side */
-	if (rect->x + rect->w < freeRect.x + freeRect.w)
+	if (rect->x < freeRect.x + freeRect.w && rect->x + rect->w > freeRect.x)
 	{
-		newRect = freeRect;
-		newRect.x = rect->x + rect->w;
-		newRect.w = freeRect.x + freeRect.w - (rect->x + rect->w);
-		Cram_Internal_AddFreeRect(context, newRect);
-	}
+		/* Top side */
+		if (rect->y > freeRect.y && rect->y < freeRect.y + freeRect.h)
+		{
+			newRect = freeRect;
+			newRect.h = rect->y - freeRect.y;
+			Cram_Internal_AddFreeRect(context, newRect);
+		}
 
-	/* Top side */
-	if (rect->y > freeRect.y && rect->y < freeRect.y + freeRect.h)
-	{
-		newRect = freeRect;
-		newRect.h = rect->y - freeRect.y;
-		Cram_Internal_AddFreeRect(context, newRect);
+		/* Bottom side */
+		if (rect->y + rect->h < freeRect.y + freeRect.h)
+		{
+			newRect = freeRect;
+			newRect.y = rect->y + rect->h;
+			newRect.h = freeRect.y + freeRect.h - (rect->y + rect->h);
+			Cram_Internal_AddFreeRect(context, newRect);
+		}
 	}
+}
 
-	/* Bottom side */
-	if (rect->y + rect->h < freeRect.y + freeRect.h)
+static inline uint8_t Cram_Internal_Contains(Rect *a, Rect *b)
+{
+	return b->x >= a->x &&
+		   b->y >= a->y &&
+		   b->x + b->w <= a->x + a->w &&
+		   b->y + b->h <= a->y + a->h;
+}
+
+void Cram_Internal_PruneRects(RectPackContext *context)
+{
+	int32_t i, j;
+	Rect *a;
+	Rect *b;
+
+	for (i = context->freeRectangleCount - 1; i >= 0; i -= 1)
 	{
-		newRect = freeRect;
-		newRect.y = rect->y + rect->h;
-		newRect.h = freeRect.y + freeRect.h - (rect->y + rect->h);
-		Cram_Internal_AddFreeRect(context, newRect);
+		a = &context->freeRectangles[i];
+
+		for (j = context->freeRectangleCount - 1; j > i; j -= 1)
+		{
+			b = &context->freeRectangles[j];
+
+			if (Cram_Internal_Contains(b, a))
+			{
+				/* plug the hole */
+				context->freeRectangles[j] = context->freeRectangles[context->freeRectangleCount - 1];
+				context->freeRectangleCount -= 1;
+				break;
+			}
+
+			if (Cram_Internal_Contains(a, b))
+			{
+				/* plug the hole */
+				context->freeRectangles[j] = context->freeRectangles[context->freeRectangleCount - 1];
+				context->freeRectangleCount -= 1;
+			}
+		}
 	}
 }
 
@@ -385,6 +432,8 @@ int8_t Cram_Internal_PackRects(RectPackContext *context, Rect *rects, uint32_t n
 		/* plug the hole */
 		rectsToPack[bestRectIndex] = rectsToPack[rectsToPackCount - 1];
 		rectsToPackCount -= 1;
+
+		Cram_Internal_PruneRects(context);
 	}
 
 	Cram_free(rectsToPack);