diff --git a/src/compiler/tsc.ts b/src/compiler/tsc.ts
index daccfca33b8..43211313237 100644
--- a/src/compiler/tsc.ts
+++ b/src/compiler/tsc.ts
@@ -21,7 +21,7 @@ namespace ts {
         return <string>diagnostic.messageText;
     }
 
-    let reportDiagnostic = createDiagnosticReporter();
+    let reportDiagnostic = createDiagnosticReporter(sys);
     function udpateReportDiagnostic(options: CompilerOptions) {
         if (options.pretty) {
             reportDiagnostic = createDiagnosticReporter(sys, /*pretty*/ true);
@@ -150,33 +150,28 @@ namespace ts {
         return sys.exit(exitStatus);
     }
 
-    function createWatchCompilerHost(): WatchCompilerHost {
-        const watchCompilerHost = ts.createWatchCompilerHost(sys, reportDiagnostic);
+    function updateWatchCompilationHost(watchCompilerHost: WatchCompilerHost) {
         const compilerWithBuilderState = watchCompilerHost.afterProgramCreate;
         watchCompilerHost.beforeProgramCreate = enableStatistics;
         watchCompilerHost.afterProgramCreate = (host, program) => {
             compilerWithBuilderState(host, program);
             reportStatistics(program);
         };
-        return watchCompilerHost;
     }
 
     function createWatchOfConfigFile(configParseResult: ParsedCommandLine, optionsToExtend: CompilerOptions) {
-        const watchCompilerHost = createWatchCompilerHost() as WatchCompilerHostOfConfigFile;
-        watchCompilerHost.onConfigFileDiagnostic = reportDiagnostic;
+        const watchCompilerHost = ts.createWatchCompilerHostOfConfigFile(configParseResult.options.configFilePath, optionsToExtend, sys, reportDiagnostic);
+        updateWatchCompilationHost(watchCompilerHost);
         watchCompilerHost.rootFiles = configParseResult.fileNames;
         watchCompilerHost.options = configParseResult.options;
-        watchCompilerHost.configFileName = configParseResult.options.configFilePath;
-        watchCompilerHost.optionsToExtend = optionsToExtend;
         watchCompilerHost.configFileSpecs = configParseResult.configFileSpecs;
         watchCompilerHost.configFileWildCardDirectories = configParseResult.wildcardDirectories;
         createWatch(watchCompilerHost);
     }
 
     function createWatchOfFilesAndCompilerOptions(rootFiles: string[], options: CompilerOptions) {
-        const watchCompilerHost = createWatchCompilerHost() as WatchCompilerHostOfFilesAndCompilerOptions;
-        watchCompilerHost.rootFiles = rootFiles;
-        watchCompilerHost.options = options;
+        const watchCompilerHost = ts.createWatchCompilerHostOfFilesAndCompilerOptions(rootFiles, options, sys, reportDiagnostic);
+        updateWatchCompilationHost(watchCompilerHost);
         createWatch(watchCompilerHost);
     }
 
diff --git a/src/compiler/watch.ts b/src/compiler/watch.ts
index 0bd0fc499b7..2653be5e20d 100644
--- a/src/compiler/watch.ts
+++ b/src/compiler/watch.ts
@@ -15,7 +15,7 @@ namespace ts {
      * Create a function that reports error by writing to the system and handles the formating of the diagnostic
      */
     /*@internal*/
-    export function createDiagnosticReporter(system = sys, pretty?: boolean): DiagnosticReporter {
+    export function createDiagnosticReporter(system: System, pretty?: boolean): DiagnosticReporter {
         const host: FormatDiagnosticsHost = system === sys ? sysFormatDiagnosticsHost : {
             getCurrentDirectory: () => system.getCurrentDirectory(),
             getNewLine: () => system.newLine,
@@ -266,6 +266,7 @@ namespace ts {
      */
     /*@internal*/
     export interface WatchCompilerHostOfConfigFile extends WatchCompilerHost {
+        cachedDirectoryStructureHost?: CachedDirectoryStructureHost;
         rootFiles?: string[];
         options?: CompilerOptions;
         optionsToExtend?: CompilerOptions;
@@ -298,8 +299,7 @@ namespace ts {
     /**
      * Creates the watch compiler host that can be extended with config file or root file names and options host
      */
-    /*@internal*/
-    export function createWatchCompilerHost(system = sys, reportDiagnostic: DiagnosticReporter | undefined): WatchCompilerHost {
+    function createWatchCompilerHost(system = sys, reportDiagnostic: DiagnosticReporter | undefined): WatchCompilerHost {
         return {
             useCaseSensitiveFileNames: () => system.useCaseSensitiveFileNames,
             getNewLine: () => system.newLine,
@@ -325,26 +325,42 @@ namespace ts {
     }
 
     /**
-     * Create the watched program for config file
+     * Creates the watch compiler host from system for config file in watch mode
      */
-    export function createWatchOfConfigFile(configFileName: string, optionsToExtend?: CompilerOptions, system?: System, reportDiagnostic?: DiagnosticReporter): WatchOfConfigFile {
+    /*@internal*/
+    export function createWatchCompilerHostOfConfigFile(configFileName: string, optionsToExtend: CompilerOptions | undefined, system: System, reportDiagnostic: DiagnosticReporter | undefined): WatchCompilerHostOfConfigFile {
         reportDiagnostic = reportDiagnostic || createDiagnosticReporter(system);
         const host = createWatchCompilerHost(system, reportDiagnostic) as WatchCompilerHostOfConfigFile;
         host.onConfigFileDiagnostic = reportDiagnostic;
         host.onUnRecoverableConfigFileDiagnostic = diagnostic => reportUnrecoverableDiagnostic(system, reportDiagnostic, diagnostic);
         host.configFileName = configFileName;
         host.optionsToExtend = optionsToExtend;
-        return createWatch(host);
+        return host;
+    }
+
+    /**
+     * Creates the watch compiler host from system for compiling root files and options in watch mode
+     */
+    /*@internal*/
+    export function createWatchCompilerHostOfFilesAndCompilerOptions(rootFiles: string[], options: CompilerOptions, system: System, reportDiagnostic: DiagnosticReporter | undefined): WatchCompilerHostOfFilesAndCompilerOptions {
+        const host = createWatchCompilerHost(system, reportDiagnostic) as WatchCompilerHostOfFilesAndCompilerOptions;
+        host.rootFiles = rootFiles;
+        host.options = options;
+        return host;
+    }
+
+    /**
+     * Create the watched program for config file
+     */
+    export function createWatchOfConfigFile(configFileName: string, optionsToExtend?: CompilerOptions, system = sys, reportDiagnostic?: DiagnosticReporter): WatchOfConfigFile {
+        return createWatch(createWatchCompilerHostOfConfigFile(configFileName, optionsToExtend, system, reportDiagnostic));
     }
 
     /**
      * Create the watched program for root files and compiler options
      */
     export function createWatchOfFilesAndCompilerOptions(rootFiles: string[], options: CompilerOptions, system = sys, reportDiagnostic?: DiagnosticReporter): WatchOfFilesAndCompilerOptions {
-        const host = createWatchCompilerHost(system, reportDiagnostic) as WatchCompilerHostOfFilesAndCompilerOptions;
-        host.rootFiles = rootFiles;
-        host.options = options;
-        return createWatch(host);
+        return createWatch(createWatchCompilerHostOfFilesAndCompilerOptions(rootFiles, options, system, reportDiagnostic));
     }
 
     /**