diff --git a/ckan/logic/action/update.py b/ckan/logic/action/update.py
index db451f5b887..69518fe1c93 100644
--- a/ckan/logic/action/update.py
+++ b/ckan/logic/action/update.py
@@ -510,8 +510,12 @@ def _group_or_org_update(context, data_dict, is_org=False):
     else:
         rev.message = _(u'REST API: Update object %s') % data.get("name")
 
-    group = model_save.group_dict_save(data, context,
-        prevent_packages_update=is_org)
+    contains_packages = 'packages' in data_dict
+
+    group = model_save.group_dict_save(
+        data, context,
+        prevent_packages_update=is_org or not contains_packages
+    )
 
     if is_org:
         plugin_type = plugins.IOrganizationController
diff --git a/ckan/tests/logic/action/test_patch.py b/ckan/tests/logic/action/test_patch.py
index 4de8a8765c5..0ab5ce6ca80 100644
--- a/ckan/tests/logic/action/test_patch.py
+++ b/ckan/tests/logic/action/test_patch.py
@@ -75,6 +75,37 @@ def test_group_patch_updating_single_field(self):
         assert_equals(group2['name'], 'economy')
         assert_equals(group2['description'], 'somethingnew')
 
+    def test_group_patch_preserve_datasets(self):
+        user = factories.User()
+        group = factories.Group(
+            name='economy',
+            description='some test now',
+            user=user)
+        factories.Dataset(groups=[{'name': group['name']}])
+
+        group2 = helpers.call_action('group_show', id=group['id'])
+        assert_equals(1, group2['package_count'])
+
+        group = helpers.call_action(
+            'group_patch',
+            id=group['id'],
+            context={'user': user['name']})
+
+        group3 = helpers.call_action('group_show', id=group['id'])
+        assert_equals(1, group3['package_count'])
+
+        group = helpers.call_action(
+            'group_patch',
+            id=group['id'],
+            packages=[],
+            context={'user': user['name']})
+
+        group4 = helpers.call_action(
+            'group_show', id=group['id'], include_datasets=True
+        )
+        assert_equals(0, group4['package_count'])
+
+
     def test_organization_patch_updating_single_field(self):
         user = factories.User()
         organization = factories.Organization(