Index: wp-admin/admin-ajax.php
===================================================================
--- wp-admin/admin-ajax.php	(revision 26150)
+++ wp-admin/admin-ajax.php	(working copy)
@@ -58,7 +58,7 @@
 	'wp-remove-post-lock', 'dismiss-wp-pointer', 'upload-attachment', 'get-attachment',
 	'query-attachments', 'save-attachment', 'save-attachment-compat', 'send-link-to-editor',
 	'send-attachment-to-editor', 'save-attachment-order', 'heartbeat', 'get-revision-diffs',
-	'save-user-color-scheme',
+	'save-user-color-scheme', 'generate_password',
 );
 
 // Register core Ajax calls.
Index: wp-admin/includes/ajax-actions.php
===================================================================
--- wp-admin/includes/ajax-actions.php	(revision 26150)
+++ wp-admin/includes/ajax-actions.php	(working copy)
@@ -2264,3 +2264,7 @@
 	update_user_option( $user_id, 'admin_color', $color_scheme, true );
 	wp_send_json_success();
 }
+
+function wp_ajax_generate_password() {
+	die( wp_generate_password() );
+}
\ No newline at end of file
Index: wp-admin/includes/user.php
===================================================================
--- wp-admin/includes/user.php	(revision 26150)
+++ wp-admin/includes/user.php	(working copy)
@@ -157,6 +157,22 @@
 
 	if ( $update ) {
 		$user_id = wp_update_user( $user );
+
+		// Encourage the user to reset their password
+		if( ! empty( $_POST['reset_password'] ) ) {
+			update_user_option( $user_id, 'default_password_nag', true, true );
+		}
+
+		// Send the new, plaintext password to the user
+		if( ! empty( $_POST['send_password'] ) ) {
+			$blogname = wp_specialchars_decode( get_option( 'blogname' ), ENT_QUOTES );
+			$message  = sprintf( __( 'Username: %s' ), $user->user_login ) . "\r\n";
+			$message .= sprintf( __( 'Password: %s' ), $pass1 ) . "\r\n";
+			$message .= wp_login_url() . "\r\n";
+
+			wp_mail( $user->user_email, sprintf( __( '[%s] Your username and password' ), $blogname ), $message );
+		}
+
 	} else {
 		$user_id = wp_insert_user( $user );
 		wp_new_user_notification( $user_id, isset( $_POST['send_password'] ) ? wp_unslash( $pass1 ) : '' );
Index: wp-admin/js/user-profile.js
===================================================================
--- wp-admin/js/user-profile.js	(revision 26150)
+++ wp-admin/js/user-profile.js	(working copy)
@@ -35,6 +35,11 @@
 		$('#pass1').val('').keyup( check_pass_strength );
 		$('#pass2').val('').keyup( check_pass_strength );
 		$('#pass-strength-result').show();
+		$('#generate-password').on('click', function() {
+			$.post( ajaxurl, { action: 'generate_password' }, function( response ) {
+				$('#pass1,#pass2').val( response ).trigger('keyup');
+			});
+		});
 		$('.color-palette').click( function() {
 			$(this).siblings('input[name="admin_color"]').prop('checked', true);
 		});
Index: wp-admin/user-edit.php
===================================================================
--- wp-admin/user-edit.php	(revision 26150)
+++ wp-admin/user-edit.php	(working copy)
@@ -384,12 +384,26 @@
 <tr>
 	<th scope="row"><label for="pass2"><?php _e('Repeat New Password'); ?></label></th>
 	<td>
-	<input name="pass2" type="password" id="pass2" size="16" value="" autocomplete="off" /> <span class="description" for="pass2"><?php _e("Type your new password again."); ?></span>
-	<br />
-	<div id="pass-strength-result"><?php _e('Strength indicator'); ?></div>
-	<p class="description indicator-hint"><?php _e('Hint: The password should be at least seven characters long. To make it stronger, use upper and lower case letters, numbers and symbols like ! " ? $ % ^ &amp; ).'); ?></p>
+		<input name="pass2" type="password" id="pass2" size="16" value="" autocomplete="off" /> <span class="description" for="pass2"><?php _e("Type your new password again."); ?></span>
+		<br />
+		<div id="pass-strength-result"><?php _e('Strength indicator'); ?></div>
+		<p class="description indicator-hint"><?php _e('Hint: The password should be at least seven characters long. To make it stronger, use upper and lower case letters, numbers and symbols like ! " ? $ % ^ &amp; ).'); ?></p>
+		<br/>
+		<input type="button" name="generate-password" id="generate-password" value="<?php _e( 'Generate Password' ); ?>" class="button hide-if-no-js" />
 	</td>
 </tr>
+<tr class="hide-if-no-js">
+	<th scope="row"><label for="send_password"><?php _e( 'Send Password?' ) ?></label></th>
+	<td>
+		<label for="send_password">
+			<input type="checkbox" name="send_password" id="send_password" /> <?php _e( 'Send this password to the user by email.'); ?>
+		</label>
+		<br/>
+		<label for="reset_password">
+			<input type="checkbox" name="reset_password" id="reset_password" /> <?php _e( 'Encourage the user to change their password, once logged in.' ); ?>
+		</label>
+	</td>
+</tr>
 <?php endif; ?>
 </table>