diff --git a/builtin/submodule--helper.c b/builtin/submodule--helper.c
index df0d9c166f0..74614a951e8 100644
--- a/builtin/submodule--helper.c
+++ b/builtin/submodule--helper.c
@@ -317,8 +317,12 @@ static void init_submodule(const char *path, const char *prefix, int quiet)
 	/* Only loads from .gitmodules, no overlay with .git/config */
 	gitmodules_config();
 
-	if (prefix) {
-		strbuf_addf(&sb, "%s%s", prefix, path);
+	if (prefix && get_super_prefix())
+		die("BUG: cannot have prefix and superprefix");
+	else if (prefix)
+		displaypath = xstrdup(relative_path(path, prefix, &sb));
+	else if (get_super_prefix()) {
+		strbuf_addf(&sb, "%s%s", get_super_prefix(), path);
 		displaypath = strbuf_detach(&sb, NULL);
 	} else
 		displaypath = xstrdup(path);
@@ -403,9 +407,6 @@ static int module_init(int argc, const char **argv, const char *prefix)
 	int i;
 
 	struct option module_init_options[] = {
-		OPT_STRING(0, "prefix", &prefix,
-			   N_("path"),
-			   N_("alternative anchor for relative paths")),
 		OPT__QUIET(&quiet, N_("Suppress output for initializing a submodule")),
 		OPT_END()
 	};
@@ -1144,7 +1145,7 @@ static struct cmd_struct commands[] = {
 	{"relative-path", resolve_relative_path, 0},
 	{"resolve-relative-url", resolve_relative_url, 0},
 	{"resolve-relative-url-test", resolve_relative_url_test, 0},
-	{"init", module_init, 0},
+	{"init", module_init, SUPPORT_SUPER_PREFIX},
 	{"remote-branch", resolve_remote_submodule_branch, 0},
 	{"absorb-git-dirs", absorb_git_dirs, SUPPORT_SUPER_PREFIX},
 };
diff --git a/git-submodule.sh b/git-submodule.sh
index b43af1742c7..97881759792 100755
--- a/git-submodule.sh
+++ b/git-submodule.sh
@@ -371,7 +371,7 @@ cmd_init()
 		shift
 	done
 
-	git ${wt_prefix:+-C "$wt_prefix"} submodule--helper init ${GIT_QUIET:+--quiet} ${prefix:+--prefix "$prefix"} "$@"
+	git ${wt_prefix:+-C "$wt_prefix"} ${prefix:+--super-prefix "$prefix"} submodule--helper init ${GIT_QUIET:+--quiet}  "$@"
 }
 
 #
diff --git a/t/t7406-submodule-update.sh b/t/t7406-submodule-update.sh
index 64f322c4cc8..725bbed1f86 100755
--- a/t/t7406-submodule-update.sh
+++ b/t/t7406-submodule-update.sh
@@ -140,6 +140,23 @@ test_expect_success 'submodule update --init --recursive from subdirectory' '
 	test_i18ncmp expect2 actual2
 '
 
+cat <<EOF >expect2
+Submodule 'foo/sub' ($pwd/withsubs/../rebasing) registered for path 'sub'
+EOF
+
+test_expect_success 'submodule update --init from and of subdirectory' '
+	git init withsubs &&
+	(cd withsubs &&
+	 mkdir foo &&
+	 git submodule add "$(pwd)/../rebasing" foo/sub &&
+	 (cd foo &&
+	  git submodule deinit -f sub &&
+	  git submodule update --init sub 2>../../actual2
+	 )
+	) &&
+	test_i18ncmp expect2 actual2
+'
+
 apos="'";
 test_expect_success 'submodule update does not fetch already present commits' '
 	(cd submodule &&