diff --git a/lib/ansible/template/__init__.py b/lib/ansible/template/__init__.py
index eded032c7cc..1f41fcee7b1 100644
--- a/lib/ansible/template/__init__.py
+++ b/lib/ansible/template/__init__.py
@@ -39,6 +39,11 @@ from ansible.template.template import AnsibleJ2Template
 from ansible.template.vars import AnsibleJ2Vars
 from ansible.utils.debug import debug
 
+try:
+    from hashlib import sha1
+except ImportError:
+    from sha import sha as sha1
+
 from numbers import Number
 
 __all__ = ['Templar']
@@ -270,6 +275,9 @@ class Templar:
         before being sent through the template engine. 
         '''
 
+        if fail_on_undefined is None:
+            fail_on_undefined = self._fail_on_undefined_errors
+
         # Don't template unsafe variables, instead drop them back down to
         # their constituent type.
         if hasattr(variable, '__UNSAFE__'):
@@ -302,10 +310,10 @@ class Templar:
                                 return C.DEFAULT_NULL_REPRESENTATION
 
                     # Using a cache in order to prevent template calls with already templated variables
-                    cache_key = variable + str(preserve_trailing_newlines) + str(escape_backslashes) + str(overrides)
-                    try:
-                        result = self._cached_result[cache_key]
-                    except KeyError:
+                    sha1_hash = sha1(variable + str(preserve_trailing_newlines) + str(escape_backslashes) + str(fail_on_undefined) + str(overrides)).hexdigest()
+                    if sha1_hash in self._cached_result:
+                        result = self._cached_result[sha1_hash]
+                    else:
                         result = self._do_template(variable, preserve_trailing_newlines=preserve_trailing_newlines, escape_backslashes=escape_backslashes, fail_on_undefined=fail_on_undefined, overrides=overrides)
                         if convert_data:
                             # if this looks like a dictionary or list, convert it to such using the safe_eval method
@@ -317,7 +325,7 @@ class Templar:
                                 else:
                                     # FIXME: if the safe_eval raised an error, should we do something with it?
                                     pass
-                        self._cached_result[cache_key] = result
+                        self._cached_result[sha1_hash] = result
 
 
                 #return self._clean_data(result)
diff --git a/lib/ansible/vars/hostvars.py b/lib/ansible/vars/hostvars.py
index 9f83342be3e..ff7fa84fb6c 100644
--- a/lib/ansible/vars/hostvars.py
+++ b/lib/ansible/vars/hostvars.py
@@ -28,6 +28,11 @@ from ansible import constants as C
 from ansible.inventory.host import Host
 from ansible.template import Templar
 
+try:
+    from hashlib import sha1
+except ImportError:
+    from sha import sha as sha1
+
 __all__ = ['HostVars']
 
 # Note -- this is a Mapping, not a MutableMapping
@@ -39,6 +44,7 @@ class HostVars(collections.Mapping):
         self._loader = loader
         self._play = play
         self._variable_manager = variable_manager
+        self._cached_result = {}
 
         hosts = inventory.get_hosts(ignore_limits_and_restrictions=True)
 
@@ -68,8 +74,16 @@ class HostVars(collections.Mapping):
 
         host = self._lookup.get(host_name)
         data = self._variable_manager.get_vars(loader=self._loader, host=host, play=self._play, include_hostvars=False)
-        templar = Templar(variables=data, loader=self._loader)
-        return templar.template(data, fail_on_undefined=False)
+
+        # Using cache in order to avoid template call
+        sha1_hash = sha1(str(data)).hexdigest()
+        if sha1_hash in self._cached_result:
+            result = self._cached_result[sha1_hash]
+        else:
+            templar = Templar(variables=data, loader=self._loader)
+            result = templar.template(data, fail_on_undefined=False)
+            self._cached_result[sha1_hash] = result
+        return result
 
     def __contains__(self, host_name):
         item = self.get(host_name)