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When I disconnect my monitor from my laptop, Ubuntu still seems to think that it is plugged in and does't update the display. This issue is Ubuntu specific (not occuring in windows) and my monitor worked fine with another laptop (Ubuntu 13.04, exact same drivers).

The quickfix:

• open system settings
  


• click Displays
  

Useful specs:

• 
  Graphics drivers: nvidia-313 (problem also occurs with the other propriatary drivers)


• 
  Graphics card: Nvidia Quadro K1000M


• 
  Monitor: Benq ET-0019-N


• 
  Cable: VGA D-sub DE15


• 
  OS: Ubuntu 13.04

I would like Ubuntu to update the display settings automagically whenever the monitor cable gets disconnected. How would I do that?

There is an old bug on Launchpad - bug #306735 - which was marked invalid, the explanation being that it is a known problem but fairly complex (more explanation here).

So, as far as I know, there is not an automatic method for what you asked in the true sense. But you can use autorandr (you have to install disper first - run sudo apt-get install disper from terminal), a script by Stefan Tomanek. Using this script (autorandr) you can add a keyboard shortcut for autorandr --change command and all you have to do when you connect or disconnect an external monitor is to press that keyboard shortcut. All of these are explained very nice in this answer (I just tested in Ubuntu 13.04 and everything goes well).

After you test the script in terminal, you must to see the following post if you want to add a custom keyboard shortcut for the script:

• How can I change what keys on my keyboard do? (How can I create custom keyboard commands/shortcuts?)

From the Appendix B in the NVIDIA driver README:

Option "UseHotplugEvents" "boolean"

When this option is enabled, the NVIDIA X driver will generate RandR display changed events when displays are plugged into or
unplugged from an NVIDIA GPU. Some desktop environments will listen
for these events and dynamically reconfigure the desktop when displays
are added or removed.

Disabling this option suppresses the generation of these RandR events for non-DisplayPort displays, i.e., ones connected via VGA,
DVI, or HDMI. Hotplug events cannot be suppressed for displays
connected via DisplayPort.

Note that probing the display configuration (e.g. with xrandr or nvidia-settings) may cause RandR display changed events to be
generated, regardless of whether this option is enabled or disabled.
Additionally, some VGA ports are incapable of hotplug detection: on
such ports, the addition or removal of displays can only be detected
by re-probing the display configuration.

Default: on. The driver will generate RandR events when displays are added or removed.

So, assuming you have not disabled this option, the problem narrows to one of these alternatives:

• The VGA cable or the VGA connector on the card have some DDC pins broken (either pin 12, pin 15 or pin 9). Please attach another VGA cable and try again.




• Your Nvidia Quadro K1000M based video card has a connector that does NOT support this detection, and invoking xrandr or equivalents (as opening the Display Settings) fire this detection. If that is the case, this will never work --but the detection shouldn't work either on other Operative Systems. Never seen this in person, though.




• Or maybe there is some bug on the NVIDIA driver that prevents this detection from working properly. Try another driver versions (such as 304) and see if the problem persists.

If you are running some flavour of nvidia's proprietary driver, then, as mentioned in Jorge's answer, just running xrandr on its own seems to fix the issue.