diff --git a/test/functional/p2p_permissions.py b/test/functional/p2p_permissions.py
new file mode 100644
--- /dev/null
+++ b/test/functional/p2p_permissions.py
@@ -0,0 +1,117 @@
+#!/usr/bin/env python3
+# Copyright (c) 2015-2018 The Bitcoin Core developers
+# Distributed under the MIT software license, see the accompanying
+# file COPYING or http://www.opensource.org/licenses/mit-license.php.
+"""Test p2p permission message.
+
+Test that permissions are correctly calculated and applied
+"""
+
+from test_framework.test_node import ErrorMatch
+from test_framework.test_framework import BitcoinTestFramework
+from test_framework.util import (
+    assert_equal,
+    connect_nodes,
+    p2p_port,
+)
+
+
+class P2PPermissionsTests(BitcoinTestFramework):
+    def set_test_params(self):
+        self.num_nodes = 2
+        self.setup_clean_chain = True
+        self.extra_args = [[], []]
+
+    def run_test(self):
+        self.checkpermission(
+            # relay permission added
+            ["-whitelist=127.0.0.1", "-whitelistrelay"],
+            ["relay", "noban", "mempool"],
+            True)
+
+        self.checkpermission(
+            # forcerelay and relay permission added
+            # Legacy parameter interaction which set whitelistrelay to true
+            # if whitelistforcerelay is true
+            ["-whitelist=127.0.0.1", "-whitelistforcerelay"],
+            ["forcerelay", "relay", "noban", "mempool"],
+            True)
+
+        # Let's make sure permissions are merged correctly
+        # For this, we need to use whitebind instead of bind
+        # by modifying the configuration file.
+        ip_port = "127.0.0.1:{}".format(p2p_port(1))
+        self.replaceinconfig(
+            1,
+            "bind=127.0.0.1",
+            "whitebind=bloomfilter,forcerelay@" +
+            ip_port)
+        self.checkpermission(
+            ["-whitelist=noban@127.0.0.1"],
+            # Check parameter interaction forcerelay should activate relay
+            ["noban", "bloomfilter", "forcerelay", "relay"],
+            False)
+        self.replaceinconfig(
+            1,
+            "whitebind=bloomfilter,forcerelay@" +
+            ip_port,
+            "bind=127.0.0.1")
+
+        self.checkpermission(
+            # legacy whitelistrelay should be ignored
+            ["-whitelist=noban,mempool@127.0.0.1", "-whitelistrelay"],
+            ["noban", "mempool"],
+            False)
+
+        self.checkpermission(
+            # legacy whitelistforcerelay should be ignored
+            ["-whitelist=noban,mempool@127.0.0.1", "-whitelistforcerelay"],
+            ["noban", "mempool"],
+            False)
+
+        self.checkpermission(
+            # missing mempool permission to be considered legacy whitelisted
+            ["-whitelist=noban@127.0.0.1"],
+            ["noban"],
+            False)
+
+        self.checkpermission(
+            # all permission added
+            ["-whitelist=all@127.0.0.1"],
+            ["forcerelay", "noban", "mempool", "bloomfilter", "relay"],
+            False)
+
+        self.stop_node(1)
+        self.nodes[1].assert_start_raises_init_error(
+            ["-whitelist=oopsie@127.0.0.1"],
+            "Invalid P2P permission",
+            match=ErrorMatch.PARTIAL_REGEX)
+        self.nodes[1].assert_start_raises_init_error(
+            ["-whitelist=noban@127.0.0.1:230"],
+            "Invalid netmask specified in",
+            match=ErrorMatch.PARTIAL_REGEX)
+        self.nodes[1].assert_start_raises_init_error(
+            ["-whitebind=noban@127.0.0.1/10"],
+            "Cannot resolve -whitebind address",
+            match=ErrorMatch.PARTIAL_REGEX)
+
+    def checkpermission(self, args, expectedPermissions, whitelisted):
+        self.restart_node(1, args)
+        connect_nodes(self.nodes[0], self.nodes[1])
+        peerinfo = self.nodes[1].getpeerinfo()[0]
+        assert_equal(peerinfo['whitelisted'], whitelisted)
+        assert_equal(len(expectedPermissions), len(peerinfo['permissions']))
+        for p in expectedPermissions:
+            if p not in peerinfo['permissions']:
+                raise AssertionError(
+                    "Expected permissions {!r} is not granted.".format(p))
+
+    def replaceinconfig(self, nodeid, old, new):
+        with open(self.nodes[nodeid].bitcoinconf, encoding="utf8") as f:
+            newText = f.read().replace(old, new)
+        with open(self.nodes[nodeid].bitcoinconf, 'w', encoding="utf8") as f:
+            f.write(newText)
+
+
+if __name__ == '__main__':
+    P2PPermissionsTests().main()
diff --git a/test/functional/test_framework/test_node.py b/test/functional/test_framework/test_node.py
--- a/test/functional/test_framework/test_node.py
+++ b/test/functional/test_framework/test_node.py
@@ -61,6 +61,7 @@
                  bitcoin_cli, mocktime, coverage_dir, extra_conf=None, extra_args=None, use_cli=False, emulator=None):
         self.index = i
         self.datadir = datadir
+        self.bitcoinconf = os.path.join(self.datadir, "bitcoin.conf")
         self.stdout_dir = os.path.join(self.datadir, "stdout")
         self.stderr_dir = os.path.join(self.datadir, "stderr")
         self.host = host