diff --git a/local.c b/local.c
index 7855594..059d8c0 100644
--- a/local.c
+++ b/local.c
@@ -695,8 +695,11 @@ LCL_MakeStep(void)
 
   /* Cancel remaining slew and make the step */
   LCL_AccumulateOffset(correction, 0.0);
-  if (!LCL_ApplyStepOffset(-correction))
+  if (!LCL_ApplyStepOffset(-correction)) {
+    /* Revert the correction */
+    LCL_AccumulateOffset(-correction, 0.0);
     return 0;
+  }
 
   LOG(LOGS_WARN, "System clock was stepped by %.6f seconds", correction);
 
diff --git a/reference.c b/reference.c
index e7dc116..960e011 100644
--- a/reference.c
+++ b/reference.c
@@ -991,6 +991,8 @@ REF_SetReference(int stratum, NTP_Leap leap, int combined_sources,
   if (step_offset != 0.0) {
     if (LCL_ApplyStepOffset(step_offset))
       LOG(LOGS_WARN, "System clock was stepped by %.6f seconds", -step_offset);
+    else
+      LCL_AccumulateOffset(step_offset, 0.0);
   }
 
   update_leap_status(leap, raw_now.tv_sec, 0);
diff --git a/test/simulation/128-nocontrol b/test/simulation/128-nocontrol
index 3f0d18d..31a441b 100755
--- a/test/simulation/128-nocontrol
+++ b/test/simulation/128-nocontrol
@@ -22,6 +22,24 @@ check_chronyd_exit || test_fail
 check_source_selection || test_fail
 check_packet_interval || test_fail
 check_sync || test_fail
-check_chronyc_output "^.*Stratum *: 2.*$" || test_fail
+check_chronyc_output "^.*Stratum *: 2
+Ref time.*
+System time *: 0.000.*
+Last offset *: [+-]0.000.*$" || test_fail
+check_log_messages "Could not step" 0 0 || test_fail
+
+client_conf="makestep 0.01 -1"
+client_server_options="offset 5.0005"
+
+run_test || test_fail
+check_chronyd_exit || test_fail
+check_source_selection || test_fail
+check_packet_interval || test_fail
+check_sync || test_fail
+check_chronyc_output "^.*Stratum *: 2
+Ref time.*
+System time *: 5.000.*
+Last offset *: [+-]0.000.*$" || test_fail
+check_log_messages "Could not step" 20 60 || test_fail
 
 test_pass