diff --git a/swarm/pss/forwarding_test.go b/swarm/pss/forwarding_test.go
new file mode 100644
index 000000000..084688439
--- /dev/null
+++ b/swarm/pss/forwarding_test.go
@@ -0,0 +1,356 @@
+package pss
+
+import (
+	"fmt"
+	"math/rand"
+	"testing"
+	"time"
+
+	"github.com/ethereum/go-ethereum/crypto"
+	"github.com/ethereum/go-ethereum/p2p"
+	"github.com/ethereum/go-ethereum/p2p/enode"
+	"github.com/ethereum/go-ethereum/p2p/protocols"
+	"github.com/ethereum/go-ethereum/swarm/network"
+	"github.com/ethereum/go-ethereum/swarm/pot"
+	whisper "github.com/ethereum/go-ethereum/whisper/whisperv5"
+)
+
+type testCase struct {
+	name      string
+	recipient []byte
+	peers     []pot.Address
+	expected  []int
+	exclusive bool
+	nFails    int
+	success   bool
+	errors    string
+}
+
+var testCases []testCase
+
+// the purpose of this test is to see that pss.forward() function correctly
+// selects the peers for message forwarding, depending on the message address
+// and kademlia constellation.
+func TestForwardBasic(t *testing.T) {
+	baseAddrBytes := make([]byte, 32)
+	for i := 0; i < len(baseAddrBytes); i++ {
+		baseAddrBytes[i] = 0xFF
+	}
+	var c testCase
+	base := pot.NewAddressFromBytes(baseAddrBytes)
+	var peerAddresses []pot.Address
+	const depth = 10
+	for i := 0; i <= depth; i++ {
+		// add two peers for each proximity order
+		a := pot.RandomAddressAt(base, i)
+		peerAddresses = append(peerAddresses, a)
+		a = pot.RandomAddressAt(base, i)
+		peerAddresses = append(peerAddresses, a)
+	}
+
+	// skip one level, add one peer at one level deeper.
+	// as a result, we will have an edge case of three peers in nearest neighbours' bin.
+	peerAddresses = append(peerAddresses, pot.RandomAddressAt(base, depth+2))
+
+	kad := network.NewKademlia(base[:], network.NewKadParams())
+	ps := createPss(t, kad)
+	addPeers(kad, peerAddresses)
+
+	const firstNearest = depth * 2 // shallowest peer in the nearest neighbours' bin
+	nearestNeighbours := []int{firstNearest, firstNearest + 1, firstNearest + 2}
+	var all []int // indices of all the peers
+	for i := 0; i < len(peerAddresses); i++ {
+		all = append(all, i)
+	}
+
+	for i := 0; i < len(peerAddresses); i++ {
+		// send msg directly to the known peers (recipient address == peer address)
+		c = testCase{
+			name:      fmt.Sprintf("Send direct to known, id: [%d]", i),
+			recipient: peerAddresses[i][:],
+			peers:     peerAddresses,
+			expected:  []int{i},
+			exclusive: false,
+		}
+		testCases = append(testCases, c)
+	}
+
+	for i := 0; i < firstNearest; i++ {
+		// send random messages with proximity orders, corresponding to PO of each bin,
+		// with one peer being closer to the recipient address
+		a := pot.RandomAddressAt(peerAddresses[i], 64)
+		c = testCase{
+			name:      fmt.Sprintf("Send random to each PO, id: [%d]", i),
+			recipient: a[:],
+			peers:     peerAddresses,
+			expected:  []int{i},
+			exclusive: false,
+		}
+		testCases = append(testCases, c)
+	}
+
+	for i := 0; i < firstNearest; i++ {
+		// send random messages with proximity orders, corresponding to PO of each bin,
+		// with random proximity relative to the recipient address
+		po := i / 2
+		a := pot.RandomAddressAt(base, po)
+		c = testCase{
+			name:      fmt.Sprintf("Send direct to known, id: [%d]", i),
+			recipient: a[:],
+			peers:     peerAddresses,
+			expected:  []int{po * 2, po*2 + 1},
+			exclusive: true,
+		}
+		testCases = append(testCases, c)
+	}
+
+	for i := firstNearest; i < len(peerAddresses); i++ {
+		// recipient address falls into the nearest neighbours' bin
+		a := pot.RandomAddressAt(base, i)
+		c = testCase{
+			name:      fmt.Sprintf("recipient address falls into the nearest neighbours' bin, id: [%d]", i),
+			recipient: a[:],
+			peers:     peerAddresses,
+			expected:  nearestNeighbours,
+			exclusive: false,
+		}
+		testCases = append(testCases, c)
+	}
+
+	// send msg with proximity order much deeper than the deepest nearest neighbour
+	a2 := pot.RandomAddressAt(base, 77)
+	c = testCase{
+		name:      "proximity order much deeper than the deepest nearest neighbour",
+		recipient: a2[:],
+		peers:     peerAddresses,
+		expected:  nearestNeighbours,
+		exclusive: false,
+	}
+	testCases = append(testCases, c)
+
+	// test with partial addresses
+	const part = 12
+
+	for i := 0; i < firstNearest; i++ {
+		// send messages with partial address falling into different proximity orders
+		po := i / 2
+		if i%8 != 0 {
+			c = testCase{
+				name:      fmt.Sprintf("partial address falling into different proximity orders, id: [%d]", i),
+				recipient: peerAddresses[i][:i],
+				peers:     peerAddresses,
+				expected:  []int{po * 2, po*2 + 1},
+				exclusive: true,
+			}
+			testCases = append(testCases, c)
+		}
+		c = testCase{
+			name:      fmt.Sprintf("extended partial address falling into different proximity orders, id: [%d]", i),
+			recipient: peerAddresses[i][:part],
+			peers:     peerAddresses,
+			expected:  []int{po * 2, po*2 + 1},
+			exclusive: true,
+		}
+		testCases = append(testCases, c)
+	}
+
+	for i := firstNearest; i < len(peerAddresses); i++ {
+		// partial address falls into the nearest neighbours' bin
+		c = testCase{
+			name:      fmt.Sprintf("partial address falls into the nearest neighbours' bin, id: [%d]", i),
+			recipient: peerAddresses[i][:part],
+			peers:     peerAddresses,
+			expected:  nearestNeighbours,
+			exclusive: false,
+		}
+		testCases = append(testCases, c)
+	}
+
+	// partial address with proximity order deeper than any of the nearest neighbour
+	a3 := pot.RandomAddressAt(base, part)
+	c = testCase{
+		name:      "partial address with proximity order deeper than any of the nearest neighbour",
+		recipient: a3[:part],
+		peers:     peerAddresses,
+		expected:  nearestNeighbours,
+		exclusive: false,
+	}
+	testCases = append(testCases, c)
+
+	// special cases where partial address matches a large group of peers
+
+	// zero bytes of address is given, msg should be delivered to all the peers
+	c = testCase{
+		name:      "zero bytes of address is given",
+		recipient: []byte{},
+		peers:     peerAddresses,
+		expected:  all,
+		exclusive: false,
+	}
+	testCases = append(testCases, c)
+
+	// luminous radius of 8 bits, proximity order 8
+	indexAtPo8 := 16
+	c = testCase{
+		name:      "luminous radius of 8 bits",
+		recipient: []byte{0xFF},
+		peers:     peerAddresses,
+		expected:  all[indexAtPo8:],
+		exclusive: false,
+	}
+	testCases = append(testCases, c)
+
+	// luminous radius of 256 bits, proximity order 8
+	a4 := pot.Address{}
+	a4[0] = 0xFF
+	c = testCase{
+		name:      "luminous radius of 256 bits",
+		recipient: a4[:],
+		peers:     peerAddresses,
+		expected:  []int{indexAtPo8, indexAtPo8 + 1},
+		exclusive: true,
+	}
+	testCases = append(testCases, c)
+
+	// check correct behaviour in case send fails
+	for i := 2; i < firstNearest-3; i += 2 {
+		po := i / 2
+		// send random messages with proximity orders, corresponding to PO of each bin,
+		// with different numbers of failed attempts.
+		// msg should be received by only one of the deeper peers.
+		a := pot.RandomAddressAt(base, po)
+		c = testCase{
+			name:      fmt.Sprintf("Send direct to known, id: [%d]", i),
+			recipient: a[:],
+			peers:     peerAddresses,
+			expected:  all[i+1:],
+			exclusive: true,
+			nFails:    rand.Int()%3 + 2,
+		}
+		testCases = append(testCases, c)
+	}
+
+	for _, c := range testCases {
+		testForwardMsg(t, ps, &c)
+	}
+}
+
+// this function tests the forwarding of a single message. the recipient address is passed as param,
+// along with addresses of all peers, and indices of those peers which are expected to receive the message.
+func testForwardMsg(t *testing.T, ps *Pss, c *testCase) {
+	recipientAddr := c.recipient
+	peers := c.peers
+	expected := c.expected
+	exclusive := c.exclusive
+	nFails := c.nFails
+	tries := 0 // number of previous failed tries
+
+	resultMap := make(map[pot.Address]int)
+
+	defer func() { sendFunc = sendMsg }()
+	sendFunc = func(_ *Pss, sp *network.Peer, _ *PssMsg) bool {
+		if tries < nFails {
+			tries++
+			return false
+		}
+		a := pot.NewAddressFromBytes(sp.Address())
+		resultMap[a]++
+		return true
+	}
+
+	msg := newTestMsg(recipientAddr)
+	ps.forward(msg)
+
+	// check test results
+	var fail bool
+	precision := len(recipientAddr)
+	if precision > 4 {
+		precision = 4
+	}
+	s := fmt.Sprintf("test [%s]\nmsg address: %x..., radius: %d", c.name, recipientAddr[:precision], 8*len(recipientAddr))
+
+	// false negatives (expected message didn't reach peer)
+	if exclusive {
+		var cnt int
+		for _, i := range expected {
+			a := peers[i]
+			cnt += resultMap[a]
+			resultMap[a] = 0
+		}
+		if cnt != 1 {
+			s += fmt.Sprintf("\n%d messages received by %d peers with indices: [%v]", cnt, len(expected), expected)
+			fail = true
+		}
+	} else {
+		for _, i := range expected {
+			a := peers[i]
+			received := resultMap[a]
+			if received != 1 {
+				s += fmt.Sprintf("\npeer number %d [%x...] received %d messages", i, a[:4], received)
+				fail = true
+			}
+			resultMap[a] = 0
+		}
+	}
+
+	// false positives (unexpected message reached peer)
+	for k, v := range resultMap {
+		if v != 0 {
+			// find the index of the false positive peer
+			var j int
+			for j = 0; j < len(peers); j++ {
+				if peers[j] == k {
+					break
+				}
+			}
+			s += fmt.Sprintf("\npeer number %d [%x...] received %d messages", j, k[:4], v)
+			fail = true
+		}
+	}
+
+	if fail {
+		t.Fatal(s)
+	}
+}
+
+func addPeers(kad *network.Kademlia, addresses []pot.Address) {
+	for _, a := range addresses {
+		p := newTestDiscoveryPeer(a, kad)
+		kad.On(p)
+	}
+}
+
+func createPss(t *testing.T, kad *network.Kademlia) *Pss {
+	privKey, err := crypto.GenerateKey()
+	pssp := NewPssParams().WithPrivateKey(privKey)
+	ps, err := NewPss(kad, pssp)
+	if err != nil {
+		t.Fatal(err.Error())
+	}
+	return ps
+}
+
+func newTestDiscoveryPeer(addr pot.Address, kad *network.Kademlia) *network.Peer {
+	rw := &p2p.MsgPipeRW{}
+	p := p2p.NewPeer(enode.ID{}, "test", []p2p.Cap{})
+	pp := protocols.NewPeer(p, rw, &protocols.Spec{})
+	bp := &network.BzzPeer{
+		Peer: pp,
+		BzzAddr: &network.BzzAddr{
+			OAddr: addr.Bytes(),
+			UAddr: []byte(fmt.Sprintf("%x", addr[:])),
+		},
+	}
+	return network.NewPeer(bp, kad)
+}
+
+func newTestMsg(addr []byte) *PssMsg {
+	msg := newPssMsg(&msgParams{})
+	msg.To = addr[:]
+	msg.Expire = uint32(time.Now().Add(time.Second * 60).Unix())
+	msg.Payload = &whisper.Envelope{
+		Topic: [4]byte{},
+		Data:  []byte("i have nothing to hide"),
+	}
+	return msg
+}
diff --git a/swarm/pss/pss.go b/swarm/pss/pss.go
index 1bc28890f..d15401e51 100644
--- a/swarm/pss/pss.go
+++ b/swarm/pss/pss.go
@@ -891,68 +891,97 @@ func (p *Pss) send(to []byte, topic Topic, msg []byte, asymmetric bool, key []by
 	return nil
 }
 
-// Forwards a pss message to the peer(s) closest to the to recipient address in the PssMsg struct
-// The recipient address can be of any length, and the byte slice will be matched to the MSB slice
-// of the peer address of the equivalent length.
+// sendFunc is a helper function that tries to send a message and returns true on success.
+// It is set here for usage in production, and optionally overridden in tests.
+var sendFunc func(p *Pss, sp *network.Peer, msg *PssMsg) bool = sendMsg
+
+// tries to send a message, returns true if successful
+func sendMsg(p *Pss, sp *network.Peer, msg *PssMsg) bool {
+	var isPssEnabled bool
+	info := sp.Info()
+	for _, capability := range info.Caps {
+		if capability == p.capstring {
+			isPssEnabled = true
+			break
+		}
+	}
+	if !isPssEnabled {
+		log.Error("peer doesn't have matching pss capabilities, skipping", "peer", info.Name, "caps", info.Caps)
+		return false
+	}
+
+	// get the protocol peer from the forwarding peer cache
+	p.fwdPoolMu.RLock()
+	pp := p.fwdPool[sp.Info().ID]
+	p.fwdPoolMu.RUnlock()
+
+	err := pp.Send(context.TODO(), msg)
+	if err != nil {
+		metrics.GetOrRegisterCounter("pss.pp.send.error", nil).Inc(1)
+		log.Error(err.Error())
+	}
+
+	return err == nil
+}
+
+// Forwards a pss message to the peer(s) based on recipient address according to the algorithm
+// described below. The recipient address can be of any length, and the byte slice will be matched
+// to the MSB slice of the peer address of the equivalent length.
+//
+// If the recipient address (or partial address) is within the neighbourhood depth of the forwarding
+// node, then it will be forwarded to all the nearest neighbours of the forwarding node. In case of
+// partial address, it should be forwarded to all the peers matching the partial address, if there
+// are any; otherwise only to one peer, closest to the recipient address. In any case, if the message
+// forwarding fails, the node should try to forward it to the next best peer, until the message is
+// successfully forwarded to at least one peer.
 func (p *Pss) forward(msg *PssMsg) error {
 	metrics.GetOrRegisterCounter("pss.forward", nil).Inc(1)
-
+	sent := 0 // number of successful sends
 	to := make([]byte, addressLength)
 	copy(to[:len(msg.To)], msg.To)
+	neighbourhoodDepth := p.Kademlia.NeighbourhoodDepth()
 
-	// send with kademlia
-	// find the closest peer to the recipient and attempt to send
-	sent := 0
-	p.Kademlia.EachConn(to, 256, func(sp *network.Peer, po int, isproxbin bool) bool {
-		info := sp.Info()
+	// luminosity is the opposite of darkness. the more bytes are removed from the address, the higher is darkness,
+	// but the luminosity is less. here luminosity equals the number of bits given in the destination address.
+	luminosityRadius := len(msg.To) * 8
 
-		// check if the peer is running pss
-		var ispss bool
-		for _, cap := range info.Caps {
-			if cap == p.capstring {
-				ispss = true
-				break
+	// proximity order function matching up to neighbourhoodDepth bits (po <= neighbourhoodDepth)
+	pof := pot.DefaultPof(neighbourhoodDepth)
+
+	// soft threshold for msg broadcast
+	broadcastThreshold, _ := pof(to, p.BaseAddr(), 0)
+	if broadcastThreshold > luminosityRadius {
+		broadcastThreshold = luminosityRadius
+	}
+
+	var onlySendOnce bool // indicates if the message should only be sent to one peer with closest address
+
+	// if measured from the recipient address as opposed to the base address (see Kademlia.EachConn
+	// call below), then peers that fall in the same proximity bin as recipient address will appear
+	// [at least] one bit closer, but only if these additional bits are given in the recipient address.
+	if broadcastThreshold < luminosityRadius && broadcastThreshold < neighbourhoodDepth {
+		broadcastThreshold++
+		onlySendOnce = true
+	}
+
+	p.Kademlia.EachConn(to, addressLength*8, func(sp *network.Peer, po int, _ bool) bool {
+		if po < broadcastThreshold && sent > 0 {
+			return false // stop iterating
+		}
+		if sendFunc(p, sp, msg) {
+			sent++
+			if onlySendOnce {
+				return false
+			}
+			if po == addressLength*8 {
+				// stop iterating if successfully sent to the exact recipient (perfect match of full address)
+				return false
 			}
 		}
-		if !ispss {
-			log.Trace("peer doesn't have matching pss capabilities, skipping", "peer", info.Name, "caps", info.Caps)
-			return true
-		}
-
-		// get the protocol peer from the forwarding peer cache
-		sendMsg := fmt.Sprintf("MSG TO %x FROM %x VIA %x", to, p.BaseAddr(), sp.Address())
-		p.fwdPoolMu.RLock()
-		pp := p.fwdPool[sp.Info().ID]
-		p.fwdPoolMu.RUnlock()
-
-		// attempt to send the message
-		err := pp.Send(context.TODO(), msg)
-		if err != nil {
-			metrics.GetOrRegisterCounter("pss.pp.send.error", nil).Inc(1)
-			log.Error(err.Error())
-			return true
-		}
-		sent++
-		log.Trace(fmt.Sprintf("%v: successfully forwarded", sendMsg))
-
-		// continue forwarding if:
-		// - if the peer is end recipient but the full address has not been disclosed
-		// - if the peer address matches the partial address fully
-		// - if the peer is in proxbin
-		if len(msg.To) < addressLength && bytes.Equal(msg.To, sp.Address()[:len(msg.To)]) {
-			log.Trace(fmt.Sprintf("Pss keep forwarding: Partial address + full partial match"))
-			return true
-		} else if isproxbin {
-			log.Trace(fmt.Sprintf("%x is in proxbin, keep forwarding", common.ToHex(sp.Address())))
-			return true
-		}
-		// at this point we stop forwarding, and the state is as follows:
-		// - the peer is end recipient and we have full address
-		// - we are not in proxbin (directed routing)
-		// - partial addresses don't fully match
-		return false
+		return true
 	})
 
+	// if we failed to send to anyone, re-insert message in the send-queue
 	if sent == 0 {
 		log.Debug("unable to forward to any peers")
 		if err := p.enqueue(msg); err != nil {