diff --git a/GPy/VERSION b/GPy/VERSION
deleted file mode 100644
index a3df0a69..00000000
--- a/GPy/VERSION
+++ /dev/null
@@ -1 +0,0 @@
-0.8.0
diff --git a/GPy/__init__.py b/GPy/__init__.py
index 88e73d8c..5f2a209f 100644
--- a/GPy/__init__.py
+++ b/GPy/__init__.py
@@ -21,8 +21,7 @@ from . import plotting
 from .core import Model
 from .core.parameterization import Param, Parameterized, ObsAr
 
-with open('VERSION', 'r') as f:
-    __version__ = f.read()
+from .__version__ import __version__
 
 #@nottest
 try:
diff --git a/setup.cfg b/setup.cfg
index e08cd251..5c2a81c0 100644
--- a/setup.cfg
+++ b/setup.cfg
@@ -3,4 +3,4 @@ current_version = 0.8.0
 tag = True
 commit = True
 
-[bumpversion:file:GPy/VERSION]
+[bumpversion:file:GPy/__version__.py]
diff --git a/setup.py b/setup.py
index 49144a69..60d58ad8 100644
--- a/setup.py
+++ b/setup.py
@@ -9,7 +9,10 @@ import numpy as np
 def read(fname):
     return open(os.path.join(os.path.dirname(__file__), fname)).read()
 
-__version__ = read('GPy/VERSION')
+version_dummy = {}
+exec(read('GPy/__version__.py'), version_dummy)
+__version__ = version_dummy['__version__']
+del version_dummy
 
 #Mac OS X Clang doesn't support OpenMP th the current time.
 #This detects if we are building on a Mac
@@ -72,7 +75,7 @@ setup(name = 'GPy',
       package_data = {'GPy': ['defaults.cfg', 'installation.cfg',
                               'util/data_resources.json',
                               'util/football_teams.json',
-                              'VERSION']},
+                              ]},
       include_package_data = True,
       py_modules = ['GPy.__init__'],
       test_suite = 'GPy.testing',