diff --git a/Changelog.rst b/Changelog.rst
index da0e35dd..04f26ef5 100644
--- a/Changelog.rst
+++ b/Changelog.rst
@@ -1,6 +1,14 @@
 Change Log
 ============
 
+1.6.2
+++++++
+
+Fixes
+------
+
+* Native client proxy initilisation failures were not caught by ``stop_on_errors=False`` - #121.
+
 1.6.1
 +++++++
 
diff --git a/pssh/clients/native/parallel.py b/pssh/clients/native/parallel.py
index 634019d2..0a39321c 100644
--- a/pssh/clients/native/parallel.py
+++ b/pssh/clients/native/parallel.py
@@ -301,14 +301,15 @@ def _start_tunnel(self, host):
             allow_agent=self.allow_agent)
         tunnel.daemon = True
         tunnel.start()
-        self._tunnels[host] = tunnel
         while not tunnel.tunnel_open.is_set():
             logger.debug("Waiting for tunnel to become active")
             sleep(.1)
             if not tunnel.is_alive():
-                msg = "Proxy authentication failed"
-                logger.error(msg)
-                raise ProxyError(msg)
+                msg = "Proxy authentication failed. " \
+                      "Exception from tunnel client: %s"
+                logger.error(msg, tunnel.exception)
+                raise ProxyError(msg, tunnel.exception)
+        self._tunnels[host] = tunnel
         return tunnel
 
     def _make_ssh_client(self, host):
diff --git a/pssh/tunnel.py b/pssh/tunnel.py
index ce10b3dc..497ae22c 100644
--- a/pssh/tunnel.py
+++ b/pssh/tunnel.py
@@ -55,6 +55,7 @@ def __init__(self, host, fw_host, fw_port, user=None,
         self.retry_delay = retry_delay
         self.allow_agent = allow_agent
         self.timeout = timeout
+        self.exception = None
         self.tunnel_open = Event()
 
     def _read_forward_sock(self):
@@ -120,8 +121,13 @@ def _init_tunnel_client(self):
         self.session = self.client.session
 
     def run(self):
-        self._init_tunnel_client()
-        self._init_tunnel_sock()
+        try:
+            self._init_tunnel_client()
+            self._init_tunnel_sock()
+        except Exception as ex:
+            logger.error("Tunnel initilisation failed with %s", ex)
+            self.exception = ex
+            return
         logger.debug("Hub in run function: %s", get_hub())
         try:
             while True:
diff --git a/tests/test_native_parallel_client.py b/tests/test_native_parallel_client.py
index 35a5be99..a57a41be 100644
--- a/tests/test_native_parallel_client.py
+++ b/tests/test_native_parallel_client.py
@@ -39,7 +39,8 @@
 from pssh.pssh2_client import ParallelSSHClient, logger as pssh_logger
 from pssh.exceptions import UnknownHostException, \
     AuthenticationException, ConnectionErrorException, SessionError, \
-    HostArgumentException, SFTPError, SFTPIOError, Timeout, SCPError
+    HostArgumentException, SFTPError, SFTPIOError, Timeout, SCPError, \
+    ProxyError
 
 from .embedded_server.embedded_server import make_socket
 from .embedded_server.openssh import OpenSSHServer
@@ -1387,6 +1388,7 @@ def test_scp_send_dir(self):
         try:
             cmds = self.client.scp_send(local_filename, remote_filename)
             gevent.joinall(cmds, raise_error=True)
+            time.sleep(.2)
             self.assertTrue(os.path.isdir(remote_test_dir_abspath))
             self.assertTrue(os.path.isfile(remote_file_abspath))
             remote_file_data = open(remote_file_abspath, 'r').read()
@@ -1507,8 +1509,22 @@ def test_tunnel(self):
             proxy_host=proxy_host, proxy_port=self.port, num_retries=1,
             proxy_pkey=self.user_key,
             timeout=2)
-        output = client.run_command('echo me', stop_on_errors=False)
+        output = client.run_command(self.cmd, stop_on_errors=False)
         self.assertEqual(self.host, list(output.keys())[0])
+        del client
+        server.stop()
+
+    def test_tunnel_init_failure(self):
+        proxy_host = '127.0.0.20'
+        client = ParallelSSHClient(
+            [self.host], port=self.port, pkey=self.user_key,
+            proxy_host=proxy_host, proxy_port=self.port, num_retries=1,
+            proxy_pkey=self.user_key,
+            timeout=2)
+        output = client.run_command(self.cmd, stop_on_errors=False)
+        exc = output[self.host].exception
+        self.assertIsInstance(exc, ProxyError)
+        self.assertIsInstance(exc.args[1], ConnectionErrorException)
 
 #     def test_proxy_remote_host_failure_timeout(self):
 #         """Test that timeout setting is passed on to proxy to be used for the