We just rolled out a new feature for Launchpad’s Git repository hosting: Git-based merge proposals can now be linked to Launchpad bugs. This can be done manually from the web UI for the merge proposal, but normally you should just mention the Launchpad bug in the commit message of one of the commits you want to merge. The required commit message text to link to bugs #XXX and #YYY looks like this:
LP: #XXX, #YYY
This is the same form used for Launchpad bug references in debian/changelog files in source packages, and the general approach of mentioning bugs in commit messages is similar to that of various other hosting sites.
Bugs are not automatically closed when merge proposals land, because the policy for when that should happen varies from project to project: for example, projects often only close bugs when they make releases, or when their code is deployed to production sites.
Users familiar with Bazaar on Launchpad should note that the model for Git bug linking is slightly different: bugs are linked to merge proposals rather than to individual branches. This difference is mainly because individual branches within a Git repository are often much more ephemeral than Bazaar branches.
Documentation is here, along with other details of Launchpad’s Git hosting.