Index: src/protocol/http/org/apache/jmeter/protocol/http/proxy/Proxy.java
IDEA additional info:
Subsystem: com.intellij.openapi.diff.impl.patch.CharsetEP
<+>UTF-8
===================================================================
--- src/protocol/http/org/apache/jmeter/protocol/http/proxy/Proxy.java	(revision 285a56507cd6a4cdf90fe89a196c7eb7103fd8b3)
+++ src/protocol/http/org/apache/jmeter/protocol/http/proxy/Proxy.java	(revision )
@@ -267,7 +267,6 @@
              */
             if (headers != null) {
                 headers.removeHeaderNamed(HTTPConstants.HEADER_COOKIE);// Always remove cookies
-                headers.removeHeaderNamed(HTTPConstants.HEADER_AUTHORIZATION);// Always remove authorization
                 // Remove additional headers
                 for(String hdr : HEADERS_TO_REMOVE){
                     headers.removeHeaderNamed(hdr);
Index: xdocs/usermanual/component_reference.xml
IDEA additional info:
Subsystem: com.intellij.openapi.diff.impl.patch.CharsetEP
<+>UTF-8
===================================================================
--- xdocs/usermanual/component_reference.xml	(revision 285a56507cd6a4cdf90fe89a196c7eb7103fd8b3)
+++ xdocs/usermanual/component_reference.xml	(revision )
@@ -6242,8 +6242,9 @@
 </p>
 <h4>Authorization Manager</h4>
 <p>
-The Proxy server passes on any Authorization headers sent by the browser, but does not save them in the test plan.
-If the site requires Authorization, you will need to add an Authorization Manager and fill it in with the necessary entries.
+The HTTP(S) Test Script Recorder grabs "Authentication" header, decodes it from base64. If Authorization Manager was added to target
+    controller manually, HTTP(S) Test Script Recorder will find it and add authorization(matching ones will be removed). Otherwise
+    Authorization Manager will be added to target controller with authorization object.
 </p>
 <h4>Uploading files</h4>
 <p>
Index: src/protocol/http/org/apache/jmeter/protocol/http/proxy/ProxyControl.java
IDEA additional info:
Subsystem: com.intellij.openapi.diff.impl.patch.CharsetEP
<+>UTF-8
===================================================================
--- src/protocol/http/org/apache/jmeter/protocol/http/proxy/ProxyControl.java	(revision 285a56507cd6a4cdf90fe89a196c7eb7103fd8b3)
+++ src/protocol/http/org/apache/jmeter/protocol/http/proxy/ProxyControl.java	(revision )
@@ -36,8 +36,10 @@
 import java.util.LinkedList;
 import java.util.List;
 import java.util.Map;
+import java.util.ArrayList;
 import java.util.prefs.Preferences;
 
+import org.apache.commons.codec.binary.Base64;
 import org.apache.commons.codec.digest.DigestUtils;
 import org.apache.commons.io.IOUtils;
 import org.apache.commons.lang3.RandomStringUtils;
@@ -58,12 +60,17 @@
 import org.apache.jmeter.gui.GuiPackage;
 import org.apache.jmeter.gui.tree.JMeterTreeModel;
 import org.apache.jmeter.gui.tree.JMeterTreeNode;
+import org.apache.jmeter.protocol.http.control.Header;
+import org.apache.jmeter.protocol.http.control.Authorization;
 import org.apache.jmeter.protocol.http.control.HeaderManager;
+import org.apache.jmeter.protocol.http.control.AuthManager;
 import org.apache.jmeter.protocol.http.control.RecordingController;
 import org.apache.jmeter.protocol.http.gui.HeaderPanel;
+import org.apache.jmeter.protocol.http.gui.AuthPanel;
 import org.apache.jmeter.protocol.http.sampler.HTTPSampleResult;
 import org.apache.jmeter.protocol.http.sampler.HTTPSamplerBase;
 import org.apache.jmeter.protocol.http.sampler.HTTPSamplerFactory;
+import org.apache.jmeter.protocol.http.util.HTTPConstants;
 import org.apache.jmeter.samplers.SampleEvent;
 import org.apache.jmeter.samplers.SampleListener;
 import org.apache.jmeter.samplers.SampleResult;
@@ -77,6 +84,7 @@
 import org.apache.jmeter.testelement.property.JMeterProperty;
 import org.apache.jmeter.testelement.property.PropertyIterator;
 import org.apache.jmeter.testelement.property.StringProperty;
+import org.apache.jmeter.testelement.property.TestElementProperty;
 import org.apache.jmeter.threads.AbstractThreadGroup;
 import org.apache.jmeter.timers.Timer;
 import org.apache.jmeter.util.JMeterUtils;
@@ -107,6 +115,8 @@
     private static final String LOGIC_CONTROLLER_GUI = LogicControllerGui.class.getName();
 
     private static final String HEADER_PANEL = HeaderPanel.class.getName();
+    private static final String AUTH_PANEL = AuthPanel.class.getName();
+    private static final String AUTH_MANAGER = AuthManager.class.getName();
 
     public static final int DEFAULT_PORT = 8080;
 
@@ -340,7 +350,7 @@
         samplerDownloadImages = b;
         setProperty(new BooleanProperty(SAMPLER_DOWNLOAD_IMAGES, b));
     }
-    
+
     public void setNotifyChildSamplerListenerOfFilteredSamplers(boolean b) {
         notifyChildSamplerListenersOfFilteredSamples = b;
         setProperty(new BooleanProperty(NOTIFY_CHILD_SAMPLER_LISTENERS_FILTERED, b));
@@ -426,7 +436,7 @@
     public boolean getNotifyChildSamplerListenerOfFilteredSamplers() {
         return getPropertyAsBoolean(NOTIFY_CHILD_SAMPLER_LISTENERS_FILTERED, true);
     }
-    
+
     public boolean getRegexMatch() {
         return getPropertyAsBoolean(REGEX_MATCH, false);
     }
@@ -551,6 +561,10 @@
                 sampler.setUseKeepAlive(useKeepAlive);
                 sampler.setImageParser(samplerDownloadImages);
 
+                Authorization authorization = getAuthorization(subConfigs, sampler);
+                if (authorization != null) {
+                    setAuthorization(authorization, myTarget);
+                }
                 placeSampler(sampler, subConfigs, myTarget);
             } else {
                 if(log.isDebugEnabled()) {
@@ -559,7 +573,7 @@
                 notifySampleListeners = notifyChildSamplerListenersOfFilteredSamples;
                 result.setSampleLabel("["+result.getSampleLabel()+"]");
             }
-        } 
+        }
         if(notifySampleListeners) {
             // SampleEvent is not passed JMeterVariables, because they don't make sense for Proxy Recording
             notifySampleListeners(new SampleEvent(result, "WorkBench")); // TODO - is this the correct threadgroup name?
@@ -568,6 +582,31 @@
         }
     }
 
+    private Authorization getAuthorization(final TestElement[] subConfigs, HTTPSamplerBase sampler) {
+        Header authHeader = null;
+        Authorization authorization = null;
+        for (TestElement te : subConfigs) {
+            if (te instanceof HeaderManager) {
+                ArrayList<TestElementProperty> headers = (ArrayList<TestElementProperty>) ((HeaderManager) te).getHeaders().getObjectValue();
+                for (TestElementProperty tep : headers) {
+                    if (tep.getName().equals(HTTPConstants.HEADER_AUTHORIZATION)) {
+                        authHeader = (Header) tep.getObjectValue();
+                        String authCredentialsBase64=(authHeader.getValue().split(" "))[1];
+                        String authCred= new String(Base64.decodeBase64(authCredentialsBase64));
+                        authorization=new Authorization();
+                        authorization.setURL(sampler.getDomain());
+                        authorization.setUser(authCred.split(":")[0]);
+                        authorization.setPass(authCred.split(":")[1]);
+                    }
+                }
+                if (authHeader != null) {
+                    headers.remove(HTTPConstants.HEADER_AUTHORIZATION);
+                }
+            }
+        }
+        return authorization;
+    }
+
     public void stopProxy() {
         if (server != null) {
             server.stopServer();
@@ -698,6 +737,24 @@
         }
         return true;
     }
+
+    private void setAuthorization(Authorization authorization, JMeterTreeNode target) {
+        JMeterTreeModel jmeterTreeModel = GuiPackage.getInstance().getTreeModel();
+        List<JMeterTreeNode> authManagerNodes = jmeterTreeModel.getNodesOfType(AuthManager.class);
+        if (authManagerNodes.size() == 0) {
+            try {
+                log.debug("Created HTTP Authentication manager...");
+                AuthManager authManager=createAuthorizationManager(authorization);
+                jmeterTreeModel.addComponent(authManager, target);
+            } catch (IllegalUserActionException e) {
+                log.error("Failed to add Authorization Manager to target node=" + target.getName(), e);
+            }
+        }else{
+            AuthManager authManager=(AuthManager)authManagerNodes.get(0).getTestElement();
+            authManager.addAuth(authorization);
+        }
+    }
+
     /**
      * Helper method to add a Response Assertion
      * Called from AWT Event thread
@@ -709,6 +766,16 @@
         ra.setTestFieldResponseData();
         model.addComponent(ra, node);
     }
+
+    private AuthManager createAuthorizationManager(Authorization authorization) throws IllegalUserActionException {
+        AuthManager authManager = new AuthManager();
+        authManager.setProperty(TestElement.GUI_CLASS, AUTH_PANEL);
+        authManager.setProperty(TestElement.TEST_CLASS, AUTH_MANAGER);
+        authManager.setName("HTTP Authorization Manager");
+        authManager.addAuth(authorization);
+        return authManager;
+    }
+
 
     /**
      * Helper method to add a Divider
Index: src/protocol/http/org/apache/jmeter/protocol/http/control/AuthManager.java
IDEA additional info:
Subsystem: com.intellij.openapi.diff.impl.patch.CharsetEP
<+>UTF-8
===================================================================
--- src/protocol/http/org/apache/jmeter/protocol/http/control/AuthManager.java	(revision 285a56507cd6a4cdf90fe89a196c7eb7103fd8b3)
+++ src/protocol/http/org/apache/jmeter/protocol/http/control/AuthManager.java	(revision )
@@ -257,6 +257,7 @@
     }
 
     public void addAuth(Authorization auth) {
+        removeMatchingAuthorizations(auth);
         getAuthObjects().addItem(auth);
     }
 
@@ -419,8 +420,36 @@
         if (STRIP_PORT) {
             return true;
         }
-        return (url.getPort() == HTTPConstants.DEFAULT_HTTP_PORT || 
+        return (url.getPort() == HTTPConstants.DEFAULT_HTTP_PORT ||
                 url.getPort() == HTTPConstants.DEFAULT_HTTPS_PORT);
+    }
+
+    void removeMatchingAuthorizations(Authorization newAuthorization){
+        // Scan for any matching cookies
+        PropertyIterator iter = getAuthObjects().iterator();
+        while (iter.hasNext()) {
+            Authorization authorization = (Authorization) iter.next().getObjectValue();
+            if (authorization == null) {// TODO is this possible?
+                continue;
+            }
+            if (match(authorization,newAuthorization)) {
+                if (log.isDebugEnabled()) {
+                    log.debug("New Authorization = " + newAuthorization.toString()
+                            + " removing matching Cookie " + authorization.toString());
+                }
+                iter.remove();
+            }
+        }
+    }
+
+    private boolean match(Authorization a, Authorization b){
+        return
+                a.getURL().equals(b.getURL())&&
+                a.getName().equals(b.getName())&&
+                a.getPass().equals(b.getPass())&&
+                a.getDomain().equals(b.getDomain())&&
+                a.getRealm().equals(b.getRealm())&&
+                a.getMechanism().equals(b.getMechanism());
     }
 
     /** {@inheritDoc} */