diff --git a/libpub/scan.ll b/libpub/scan.ll
index 2464b0e3..1846217b 100644
--- a/libpub/scan.ll
+++ b/libpub/scan.ll
@@ -9,6 +9,7 @@
 #include "qhash.h"
 #include <wchar.h>
 #include <locale.h>
+#include <vec.h>
 #define YY_STR_BUFLEN 20*1024
 
 static void begin_P3_STR (char ch);
@@ -48,7 +49,7 @@ static char yy_p3_regex_close_char;
 static char yy_p3_regex_open_char;
 static int yy_p3_regex_start_line;
 strbuf yy_p3_regex_buf;
-static char yy_p3_str_char;
+static vec<char> yy_p3_str_char;
 
 static strbuf yy_json_strbuf;
 static int    yy_json_str_line;
@@ -391,7 +392,7 @@ nlcount (int m)
 void
 begin_P3_STR (char ch)
 {
-  yy_p3_str_char = ch;
+  yy_p3_str_char.push_back(ch);
   yy_push_state (P3_STR);
   yy_ssln = pub3::plineno ();
 }
@@ -399,12 +400,12 @@ begin_P3_STR (char ch)
 bool
 end_P3_STR (char ch)
 {
-  bool ret = false;
-  if (yy_p3_str_char == ch) {
+  if (ch == yy_p3_str_char.back()) {
+    yy_p3_str_char.pop_back();
     yy_pop_state (); 
-    ret = true;
+    return true;
   }
-  return ret;
+  return false;
 }
 
 int
diff --git a/test/pub/Makefile.am b/test/pub/Makefile.am
index 6834bdb3..25b438d3 100644
--- a/test/pub/Makefile.am
+++ b/test/pub/Makefile.am
@@ -1,6 +1,7 @@
 PACKAGE_STRING=pub
 TESTS = \
 	dict_equal.pub \
+	nested_quotes.pub \
 	scoping_for.pub \
 	scoping_globals-locals.pub \
 	scoping_order_of_decl.pub \
diff --git a/test/pub/nested_quotes.expected b/test/pub/nested_quotes.expected
new file mode 100644
index 00000000..9766475a
--- /dev/null
+++ b/test/pub/nested_quotes.expected
@@ -0,0 +1 @@
+ok
diff --git a/test/pub/nested_quotes.pub b/test/pub/nested_quotes.pub
new file mode 100644
index 00000000..dabdcf52
--- /dev/null
+++ b/test/pub/nested_quotes.pub
@@ -0,0 +1,9 @@
+{%
+locals {
+  v1 : 'Test "A balanced nested par"',
+  v2 : 'Test "A non balanced nested par',
+  v3 : "An escaped quote\"",
+  v4 : "%{"o" + 'k' }"
+}
+print(v4);
+%}