diff --git a/common/djangoapps/terrain/steps.py b/common/djangoapps/terrain/steps.py
index 52eeb23c4a..371496f823 100644
--- a/common/djangoapps/terrain/steps.py
+++ b/common/djangoapps/terrain/steps.py
@@ -9,6 +9,7 @@ from bs4 import BeautifulSoup
 import time
 import re
 import os.path
+from selenium.common.exceptions import WebDriverException
 
 from logging import getLogger
 logger = getLogger(__name__)
@@ -214,3 +215,15 @@ def save_the_course_content(path='/tmp'):
     f = open('%s/%s' % (path, filename), 'w')
     f.write(output)
     f.close
+
+@world.absorb
+def css_click(css_selector):
+    try:
+        world.browser.find_by_css(css_selector).click()
+
+    except WebDriverException:
+        # Occassionally, MathJax or other JavaScript can cover up
+        # an element  temporarily.
+        # If this happens, wait a second, then try again
+        time.sleep(1)
+        world.browser.find_by_css(css_selector).click()
diff --git a/lms/djangoapps/courseware/features/problems.feature b/lms/djangoapps/courseware/features/problems.feature
index a7fbac49c7..efeb338c45 100644
--- a/lms/djangoapps/courseware/features/problems.feature
+++ b/lms/djangoapps/courseware/features/problems.feature
@@ -1,10 +1,11 @@
-Feature: Answer choice problems
+Feature: Answer problems
     As a student in an edX course
     In order to test my understanding of the material
-    I want to answer choice based problems
+    I want to answer problems
 
     Scenario: I can answer a problem correctly
-        Given I am viewing a "<ProblemType>" problem
+        Given External graders respond "correct"
+        And I am viewing a "<ProblemType>" problem
         When I answer a "<ProblemType>" problem "correctly"
         Then My "<ProblemType>" answer is marked "correct"
 
@@ -17,9 +18,11 @@ Feature: Answer choice problems
         | numerical         |
         | formula           |
         | script            |
+        | code              |
 
     Scenario: I can answer a problem incorrectly
-        Given I am viewing a "<ProblemType>" problem
+        Given External graders respond "incorrect"
+        And I am viewing a "<ProblemType>" problem
         When I answer a "<ProblemType>" problem "incorrectly"
         Then My "<ProblemType>" answer is marked "incorrect"
 
@@ -32,6 +35,7 @@ Feature: Answer choice problems
         | numerical         |
         | formula           |
         | script            |
+        | code              |
 
     Scenario: I can submit a blank answer
         Given I am viewing a "<ProblemType>" problem
diff --git a/lms/djangoapps/courseware/features/problems.py b/lms/djangoapps/courseware/features/problems.py
index a6575c3d22..715e2689fb 100644
--- a/lms/djangoapps/courseware/features/problems.py
+++ b/lms/djangoapps/courseware/features/problems.py
@@ -1,14 +1,15 @@
 from lettuce import world, step
 from lettuce.django import django_url
-from selenium.webdriver.support.ui import Select
 import random
 import textwrap
+import time
 from common import i_am_registered_for_the_course, TEST_SECTION_NAME, section_location
 from terrain.factories import ItemFactory
 from capa.tests.response_xml_factory import OptionResponseXMLFactory, \
                         ChoiceResponseXMLFactory, MultipleChoiceResponseXMLFactory, \
                         StringResponseXMLFactory, NumericalResponseXMLFactory, \
-                        FormulaResponseXMLFactory, CustomResponseXMLFactory
+                        FormulaResponseXMLFactory, CustomResponseXMLFactory, \
+                        CodeResponseXMLFactory
 
 # Factories from capa.tests.response_xml_factory that we will use
 # to generate the problem XML, with the keyword args used to configure
@@ -78,6 +79,12 @@ PROBLEM_FACTORY_DICT = {
                         a2=0
                     return (a1+a2)==int(expect)
             """)}},
+    'code': {
+        'factory': CodeResponseXMLFactory(),
+        'kwargs': {
+            'question_text': 'Submit code to an external grader',
+            'initial_display': 'print "Hello world!"',
+            'grader_payload': '{"grader": "ps1/Spring2013/test_grader.py"}', }},
        }
 
 
@@ -116,6 +123,19 @@ def view_problem(step, problem_type):
     world.browser.visit(url)
 
 
+@step(u'External graders respond "([^"]*)"')
+def set_external_grader_response(step, correctness):
+    assert(correctness in ['correct', 'incorrect'])
+
+    response_dict = {'correct': True if correctness == 'correct' else False,
+                    'score': 1 if correctness == 'correct' else 0,
+                    'msg': 'Your problem was graded %s' % correctness}
+
+    # Set the fake xqueue server to always respond
+    # correct/incorrect when asked to grade a problem
+    world.xqueue_server.set_grade_response(response_dict)
+
+
 @step(u'I answer a "([^"]*)" problem "([^"]*)ly"')
 def answer_problem(step, problem_type, correctness):
     """ Mark a given problem type correct or incorrect, then submit it.
@@ -169,18 +189,29 @@ def answer_problem(step, problem_type, correctness):
         inputfield('script', input_num=1).fill(str(first_addend))
         inputfield('script', input_num=2).fill(str(second_addend))
 
+    elif problem_type == 'code':
+        # The fake xqueue server is configured to respond
+        # correct / incorrect no matter what we submit.
+        # Furthermore, since the inline code response uses
+        # JavaScript to make the code display nicely, it's difficult
+        # to programatically input text
+        # (there's not <textarea> we can just fill text into)
+        # For this reason, we submit the initial code in the response
+        # (configured in the problem XML above)
+        pass
+
     # Submit the problem
     check_problem(step)
 
 
 @step(u'I check a problem')
 def check_problem(step):
-    world.browser.find_by_css("input.check").click()
+    world.css_click("input.check")
 
 
 @step(u'I reset the problem')
 def reset_problem(step):
-    world.browser.find_by_css('input.reset').click()
+    world.css_click('input.reset')
 
 
 @step(u'My "([^"]*)" answer is marked "([^"]*)"')
@@ -207,7 +238,8 @@ def assert_answer_mark(step, problem_type, correctness):
                             'string': ['div.correct'],
                             'numerical': ['div.correct'],
                             'formula': ['div.correct'],
-                            'script': ['div.correct'], }
+                            'script': ['div.correct'],
+                            'code': ['span.correct'], }
 
     incorrect_selectors = {'drop down': ['span.incorrect'],
                            'multiple choice': ['label.choicegroup_incorrect',
@@ -216,7 +248,8 @@ def assert_answer_mark(step, problem_type, correctness):
                             'string': ['div.incorrect'],
                             'numerical': ['div.incorrect'],
                             'formula': ['div.incorrect'],
-                            'script': ['div.incorrect']}
+                            'script': ['div.incorrect'],
+                            'code': ['span.incorrect'], }
 
     assert(correctness in ['correct', 'incorrect', 'unanswered'])
     assert(problem_type in correct_selectors and problem_type in incorrect_selectors)
diff --git a/lms/djangoapps/courseware/features/xqueue_setup.py b/lms/djangoapps/courseware/features/xqueue_setup.py
new file mode 100644
index 0000000000..23706941a9
--- /dev/null
+++ b/lms/djangoapps/courseware/features/xqueue_setup.py
@@ -0,0 +1,32 @@
+from courseware.mock_xqueue_server.mock_xqueue_server import MockXQueueServer
+from lettuce import before, after, world
+from django.conf import settings
+import threading
+
+@before.all
+def setup_mock_xqueue_server():
+
+    # Retrieve the local port from settings
+    server_port = settings.XQUEUE_PORT
+
+    # Create the mock server instance
+    server = MockXQueueServer(server_port)
+
+    # Start the server running in a separate daemon thread
+    # Because the thread is a daemon, it will terminate
+    # when the main thread terminates.
+    server_thread = threading.Thread(target=server.serve_forever)
+    server_thread.daemon = True
+    server_thread.start()
+
+    # Store the server instance in lettuce's world
+    # so that other steps can access it
+    # (and we can shut it down later)
+    world.xqueue_server = server
+
+
+@after.all
+def teardown_mock_xqueue_server(total):
+
+    # Stop the xqueue server and free up the port
+    world.xqueue_server.shutdown()
diff --git a/lms/djangoapps/courseware/mock_xqueue_server/__init__.py b/lms/djangoapps/courseware/mock_xqueue_server/__init__.py
new file mode 100644
index 0000000000..e69de29bb2
diff --git a/lms/djangoapps/courseware/mock_xqueue_server/mock_xqueue_server.py b/lms/djangoapps/courseware/mock_xqueue_server/mock_xqueue_server.py
new file mode 100644
index 0000000000..7bc1b95662
--- /dev/null
+++ b/lms/djangoapps/courseware/mock_xqueue_server/mock_xqueue_server.py
@@ -0,0 +1,211 @@
+from BaseHTTPServer import HTTPServer, BaseHTTPRequestHandler
+import json
+import urllib
+import urlparse
+import threading
+
+from logging import getLogger
+logger = getLogger(__name__)
+
+
+class MockXQueueRequestHandler(BaseHTTPRequestHandler):
+    '''
+    A handler for XQueue POST requests.
+    '''
+
+    protocol = "HTTP/1.0"
+
+    def do_HEAD(self):
+        self._send_head()
+
+    def do_POST(self):
+        '''
+        Handle a POST request from the client
+
+        Sends back an immediate success/failure response.
+        It then POSTS back to the client
+        with grading results, as configured in MockXQueueServer.
+        '''
+        self._send_head()
+
+        # Retrieve the POST data
+        post_dict = self._post_dict()
+
+        # Log the request
+        logger.debug("XQueue received POST request %s to path %s" %
+                    (str(post_dict), self.path))
+
+        # Respond only to grading requests
+        if self._is_grade_request():
+            try:
+                xqueue_header = json.loads(post_dict['xqueue_header'])
+                xqueue_body = json.loads(post_dict['xqueue_body'])
+
+                callback_url = xqueue_header['lms_callback_url']
+
+            except KeyError:
+                # If the message doesn't have a header or body,
+                # then it's malformed.
+                # Respond with failure
+                error_msg = "XQueue received invalid grade request"
+                self._send_immediate_response(False, message=error_msg)
+
+            except ValueError:
+                # If we could not decode the body or header,
+                # respond with failure
+
+                error_msg = "XQueue could not decode grade request"
+                self._send_immediate_response(False, message=error_msg)
+
+            else:
+                # Send an immediate response of success
+                # The grade request is formed correctly
+                self._send_immediate_response(True)
+
+                # Wait a bit before POSTing back to the callback url with the
+                # grade result configured by the server
+                # Otherwise, the problem will not realize it's
+                # queued and it will keep waiting for a response
+                # indefinitely
+                delayed_grade_func = lambda: self._send_grade_response(callback_url,
+                                                                        xqueue_header)
+
+                timer = threading.Timer(2, delayed_grade_func)
+                timer.start()
+
+        # If we get a request that's not to the grading submission
+        # URL, return an error
+        else:
+            error_message = "Invalid request URL"
+            self._send_immediate_response(False, message=error_message)
+
+
+    def _send_head(self):
+        '''
+        Send the response code and MIME headers
+        '''
+        if self._is_grade_request():
+            self.send_response(200)
+        else:
+            self.send_response(500)
+
+        self.send_header('Content-type', 'text/plain')
+        self.end_headers()
+
+    def _post_dict(self):
+        '''
+        Retrieve the POST parameters from the client as a dictionary
+        '''
+
+        try:
+            length = int(self.headers.getheader('content-length'))
+
+            post_dict = urlparse.parse_qs(self.rfile.read(length))
+
+            # The POST dict will contain a list of values
+            # for each key.
+            # None of our parameters are lists, however,
+            # so we map [val] --> val
+            # If the list contains multiple entries,
+            # we pick the first one
+            post_dict = dict(map(lambda (key, list_val): (key, list_val[0]),
+                                post_dict.items()))
+
+        except:
+            # We return an empty dict here, on the assumption
+            # that when we later check that the request has
+            # the correct fields, it won't find them,
+            # and will therefore send an error response
+            return {}
+
+        return post_dict
+
+    def _send_immediate_response(self, success, message=""):
+        '''
+        Send an immediate success/failure message
+        back to the client
+        '''
+
+        # Send the response indicating success/failure
+        response_str = json.dumps({'return_code': 0 if success else 1,
+                                'content': message})
+
+        # Log the response
+        logger.debug("XQueue: sent response %s" % response_str)
+
+        self.wfile.write(response_str)
+
+    def _send_grade_response(self, postback_url, xqueue_header):
+        '''
+        POST the grade response back to the client
+        using the response provided by the server configuration
+        '''
+        response_dict = {'xqueue_header': json.dumps(xqueue_header),
+                        'xqueue_body': json.dumps(self.server.grade_response())}
+
+        # Log the response
+        logger.debug("XQueue: sent grading response %s" % str(response_dict))
+
+        MockXQueueRequestHandler.post_to_url(postback_url, response_dict)
+
+    def _is_grade_request(self):
+        return 'xqueue/submit' in self.path
+
+    @staticmethod
+    def post_to_url(url, param_dict):
+        '''
+        POST *param_dict* to *url*
+        We make this a separate function so we can easily patch
+        it during testing.
+        '''
+        urllib.urlopen(url, urllib.urlencode(param_dict))
+
+
+class MockXQueueServer(HTTPServer):
+    '''
+    A mock XQueue grading server that responds
+    to POST requests to localhost.
+    '''
+
+    def __init__(self, port_num,
+            grade_response_dict={'correct': True, 'score': 1, 'msg': ''}):
+        '''
+        Initialize the mock XQueue server instance.
+
+        *port_num* is the localhost port to listen to
+
+        *grade_response_dict* is a dictionary that will be JSON-serialized
+            and sent in response to XQueue grading requests.
+        '''
+
+        self.set_grade_response(grade_response_dict)
+
+        handler = MockXQueueRequestHandler
+        address = ('', port_num)
+        HTTPServer.__init__(self, address, handler)
+
+    def shutdown(self):
+        '''
+        Stop the server and free up the port
+        '''
+        # First call superclass shutdown()
+        HTTPServer.shutdown(self)
+
+        # We also need to manually close the socket
+        self.socket.close()
+
+    def grade_response(self):
+        return self._grade_response
+
+    def set_grade_response(self, grade_response_dict):
+
+        # Check that the grade response has the right keys
+        assert('correct' in grade_response_dict and
+                'score' in grade_response_dict and
+                'msg' in grade_response_dict)
+
+        # Wrap the message in <div> tags to ensure that it is valid XML
+        grade_response_dict['msg'] = "<div>%s</div>" % grade_response_dict['msg']
+
+        # Save the response dictionary
+        self._grade_response = grade_response_dict
diff --git a/lms/djangoapps/courseware/mock_xqueue_server/test_mock_xqueue_server.py b/lms/djangoapps/courseware/mock_xqueue_server/test_mock_xqueue_server.py
new file mode 100644
index 0000000000..4e4d95f23b
--- /dev/null
+++ b/lms/djangoapps/courseware/mock_xqueue_server/test_mock_xqueue_server.py
@@ -0,0 +1,78 @@
+import mock
+import unittest
+import threading
+import json
+import urllib
+import urlparse
+import time
+from mock_xqueue_server import MockXQueueServer, MockXQueueRequestHandler
+
+
+class MockXQueueServerTest(unittest.TestCase):
+    '''
+    A mock version of the XQueue server that listens on a local
+    port and responds with pre-defined grade messages.
+
+    Used for lettuce BDD tests in lms/courseware/features/problems.feature
+    and lms/courseware/features/problems.py
+
+    This is temporary and will be removed when XQueue is
+    rewritten using celery.
+    '''
+
+    def setUp(self):
+
+        # Create the server
+        server_port = 8034
+        self.server_url = 'http://127.0.0.1:%d' % server_port
+        self.server = MockXQueueServer(server_port,
+                                {'correct': True, 'score': 1, 'msg': ''})
+
+        # Start the server in a separate daemon thread
+        server_thread = threading.Thread(target=self.server.serve_forever)
+        server_thread.daemon = True
+        server_thread.start()
+
+    def tearDown(self):
+
+        # Stop the server, freeing up the port
+        self.server.shutdown()
+
+    def test_grade_request(self):
+
+        # Patch post_to_url() so we can intercept
+        # outgoing POST requests from the server
+        MockXQueueRequestHandler.post_to_url = mock.Mock()
+
+        # Send a grade request
+        callback_url = 'http://127.0.0.1:8000/test_callback'
+
+        grade_header = json.dumps({'lms_callback_url': callback_url,
+                                    'lms_key': 'test_queuekey',
+                                    'queue_name': 'test_queue'})
+
+        grade_body = json.dumps({'student_info': 'test',
+                                'grader_payload': 'test',
+                                'student_response': 'test'})
+
+        grade_request = {'xqueue_header': grade_header,
+                        'xqueue_body': grade_body}
+
+        response_handle = urllib.urlopen(self.server_url + '/xqueue/submit',
+                                urllib.urlencode(grade_request))
+
+        response_dict = json.loads(response_handle.read())
+
+        # Expect that the response is success
+        self.assertEqual(response_dict['return_code'], 0)
+
+        # Wait a bit before checking that the server posted back
+        time.sleep(3)
+
+        # Expect that the server tries to post back the grading info
+        xqueue_body = json.dumps({'correct': True, 'score': 1,
+                                    'msg': '<div></div>'})
+        expected_callback_dict = {'xqueue_header': grade_header,
+                                'xqueue_body': xqueue_body}
+        MockXQueueRequestHandler.post_to_url.assert_called_with(callback_url,
+                                                        expected_callback_dict)
diff --git a/lms/envs/acceptance.py b/lms/envs/acceptance.py
index 3dac545367..6d96dfeb81 100644
--- a/lms/envs/acceptance.py
+++ b/lms/envs/acceptance.py
@@ -40,6 +40,18 @@ DATABASES = {
     }
 }
 
+# Set up XQueue information so that the lms will send
+# requests to a mock XQueue server running locally
+XQUEUE_PORT = 8027
+XQUEUE_INTERFACE = {
+    "url": "http://127.0.0.1:%d" % XQUEUE_PORT,
+    "django_auth": {
+        "username": "lms",
+        "password": "***REMOVED***"
+    },
+    "basic_auth": ('anant', 'agarwal'),
+}
+
 # Do not display the YouTube videos in the browser while running the
 # acceptance tests. This makes them faster and more reliable
 MITX_FEATURES['STUB_VIDEO_FOR_TESTING'] = True