diff --git a/rhodecode/model/permission_model.py b/rhodecode/model/permission_model.py
--- a/rhodecode/model/permission_model.py
+++ b/rhodecode/model/permission_model.py
@@ -59,30 +59,41 @@ class PermissionModel(object):
                 .filter(User.username == form_result['perm_user_name']).scalar()
         u2p = self.sa.query(UserToPerm).filter(UserToPerm.user == perm_user).all()
         if len(u2p) != 3:
-            raise Exception('There is more than 3 defined'
-            ' permissions for default user. This should not happen please verify'
-            ' your database')
+            raise Exception('Defined: %s should be 3  permissions for default'
+                            ' user. This should not happen please verify'
+                            ' your database' % len(u2p))
 
         try:
             #stage 1 change defaults    
             for p in u2p:
                 if p.permission.permission_name.startswith('repository.'):
-                    p.permission = self.get_permission_by_name(form_result['default_perm'])
+                    p.permission = self.get_permission_by_name(
+                                       form_result['default_perm'])
                     self.sa.add(p)
 
                 if p.permission.permission_name.startswith('hg.register.'):
-                    p.permission = self.get_permission_by_name(form_result['default_register'])
+                    p.permission = self.get_permission_by_name(
+                                       form_result['default_register'])
                     self.sa.add(p)
 
                 if p.permission.permission_name.startswith('hg.create.'):
-                    p.permission = self.get_permission_by_name(form_result['default_create'])
+                    p.permission = self.get_permission_by_name(
+                                        form_result['default_create'])
                     self.sa.add(p)
             #stage 2 update all default permissions for repos if checked
             if form_result['overwrite_default'] == 'true':
-                for r2p in self.sa.query(RepoToPerm).filter(RepoToPerm.user == perm_user).all():
-                    r2p.permission = self.get_permission_by_name(form_result['default_perm'])
+                for r2p in self.sa.query(RepoToPerm)\
+                               .filter(RepoToPerm.user == perm_user).all():
+                    r2p.permission = self.get_permission_by_name(
+                                         form_result['default_perm'])
                     self.sa.add(r2p)
 
+            #stage 3 set anonymous access
+            if perm_user.username == 'default':
+                perm_user.active = bool(form_result['anonymous'])
+                self.sa.add(perm_user)
+
+
             self.sa.commit()
         except:
             log.error(traceback.format_exc())