diff --git a/change_log.txt b/change_log.txt
index fd957ec8..d74c5f28 100644
--- a/change_log.txt
+++ b/change_log.txt
@@ -1,4 +1,7 @@
  ===== 3.1.30-dev ===== (xx.xx.xx)
+ 24.04.2016
+  - bugfix nested {include} with relative file path could fail when called in {block} ... {/block} https://github.com/smarty-php/smarty/issues/218
+
  14.04.2016
   - bugfix special variable {$smarty.capture.name} was not case sensitive on name https://github.com/smarty-php/smarty/issues/210
   - bugfix the default template handler must calculate the source uid https://github.com/smarty-php/smarty/issues/205
diff --git a/libs/Smarty.class.php b/libs/Smarty.class.php
index 031c1c10..9fe5670d 100644
--- a/libs/Smarty.class.php
+++ b/libs/Smarty.class.php
@@ -121,7 +121,7 @@ class Smarty extends Smarty_Internal_TemplateBase
     /**
      * smarty version
      */
-    const SMARTY_VERSION = '3.1.30-dev/62';
+    const SMARTY_VERSION = '3.1.30-dev/63';
 
     /**
      * define variable scopes
diff --git a/libs/sysplugins/smarty_internal_block.php b/libs/sysplugins/smarty_internal_block.php
index d00b14a6..9a67757b 100644
--- a/libs/sysplugins/smarty_internal_block.php
+++ b/libs/sysplugins/smarty_internal_block.php
@@ -65,6 +65,13 @@ class Smarty_Internal_Block
      */
     public $tplIndex = 0;
 
+    /**
+     * Nesting level of called sub-templates
+     *
+     * @var int
+     */
+    public $subTemplateNesting = 0;
+
     /**
      * Smarty_Internal_Block constructor.
      * - if outer level {block} of child template ($state == 1) save it as child root block
@@ -75,12 +82,13 @@ class Smarty_Internal_Block
      */
     public function __construct(Smarty_Internal_Template $tpl, $tplIndex = null)
     {
-        $this->tplIndex = $tplIndex ? $tplIndex : $tpl->ext->_inheritance->tplIndex;
-        if (isset($tpl->ext->_inheritance->childRoot[ $this->name ])) {
-            $this->child = $tpl->ext->_inheritance->childRoot[ $this->name ];
+        $inheritance = &$tpl->ext->_inheritance;
+        $this->tplIndex = $tplIndex ? $tplIndex : $inheritance->tplIndex;
+        if (isset($inheritance->childRoot[ $this->name ])) {
+            $this->child = $inheritance->childRoot[ $this->name ];
         }
-        if ($tpl->ext->_inheritance->state == 1) {
-            $tpl->ext->_inheritance->childRoot[ $this->name ] = $this;
+        if ($inheritance->state == 1) {
+            $inheritance->childRoot[ $this->name ] = $this;
             return;
         }
         // make sure we got child block of child template of current block
@@ -98,6 +106,7 @@ class Smarty_Internal_Block
      */
     public function process(Smarty_Internal_Template $tpl, Smarty_Internal_Block $parent = null)
     {
+        $inheritance = &$tpl->ext->_inheritance;
         if ($this->hide && !isset($this->child)) {
             return;
         }
@@ -109,7 +118,10 @@ class Smarty_Internal_Block
             $this->callParent($tpl);
         }
         if ($this->callsChild || !isset($this->child) || ($this->child->hide && !isset($this->child->child))) {
+            $this->subTemplateNesting = 0;
+            array_unshift($inheritance->blockCallStack, $this);
             $this->callBlock($tpl);
+            array_shift($inheritance->blockCallStack);
         } else {
             $this->child->process($tpl, $this);
         }
@@ -117,7 +129,10 @@ class Smarty_Internal_Block
             $this->callParent($tpl);
             if ($this->append) {
                 if ($this->callsChild || !isset($this->child) || ($this->child->hide && !isset($this->child->child))) {
+                    $this->subTemplateNesting = 0;
+                    array_unshift($inheritance->blockCallStack, $this);
                     $this->callBlock($tpl);
+                    array_shift($inheritance->blockCallStack);
                 } else {
                     $this->child->process($tpl, $this);
                 }
@@ -157,9 +172,12 @@ class Smarty_Internal_Block
     public function callParent(Smarty_Internal_Template $tpl)
     {
         if (isset($this->parent)) {
+            $this->parent->subTemplateNesting = 0;
+            array_unshift($tpl->ext->_inheritance->blockCallStack, $this->parent);
             $this->parent->callBlock($tpl);
+            array_shift($tpl->ext->_inheritance->blockCallStack);
         } else {
-            throw new SmartyException("inheritance: illegal {\$smarty.block.parent} or {block append/prepend} used in parent template '{$tpl->ext->_inheritance->templateResource[$this->tplIndex]}' block '{$this->name}'");
+            throw new SmartyException("inheritance: illegal {\$smarty.block.parent} or {block append/prepend} used in parent template '{$tpl->ext->_inheritance->sources[$this->tplIndex]->filepath}' block '{$this->name}'");
         }
     }
 }
\ No newline at end of file
diff --git a/libs/sysplugins/smarty_internal_compile_block.php b/libs/sysplugins/smarty_internal_compile_block.php
index cc9fc6aa..0d3c59ba 100644
--- a/libs/sysplugins/smarty_internal_compile_block.php
+++ b/libs/sysplugins/smarty_internal_compile_block.php
@@ -201,7 +201,6 @@ class Smarty_Internal_Compile_Blockclose extends Smarty_Internal_Compile_Shared_
         if ($compiler->template->compiled->has_nocache_code) {
             $output .= "\$_smarty_tpl->cached->hashes['{$compiler->template->compiled->nocache_hash}'] = true;\n";
         }
-        $output .= "\$_smarty_tpl->ext->_inheritance->blockNesting++;\n";
         if (isset($_assign)) {
             $output .= "ob_start();\n";
         }
@@ -214,8 +213,6 @@ class Smarty_Internal_Compile_Blockclose extends Smarty_Internal_Compile_Shared_
         if (isset($_assign)) {
             $output .= "\$_smarty_tpl->assign({$_assign}, ob_get_clean());\n";
         }
-        //$output .= "/*%%SmartyNocache:{$compiler->template->compiled->nocache_hash}%%*/\n";
-        $output .= "\$_smarty_tpl->ext->_inheritance->blockNesting--;\n";
         $output .= "}\n";
         $output .= "}\n";
         $output .= "/* {/block '{$_name}'} */\n\n";
diff --git a/libs/sysplugins/smarty_internal_resource_file.php b/libs/sysplugins/smarty_internal_resource_file.php
index 784a0fa3..fcf7e4f3 100644
--- a/libs/sysplugins/smarty_internal_resource_file.php
+++ b/libs/sysplugins/smarty_internal_resource_file.php
@@ -43,16 +43,13 @@ class Smarty_Internal_Resource_File extends Smarty_Resource
             ) {
                 throw new SmartyException("Template '{$file}' cannot be relative to template of resource type '{$_template->parent->source->type}'");
             }
-            // if we are inside an {block} tag the path must be relative to current template
-            if (isset($_template->ext->_inheritance) && $_template->ext->_inheritance->blockNesting &&
-                $_template->parent->parent->_objType == 2
-            ) {
-                $path = dirname($_template->parent->parent->source->filepath) . DS . $file;
-            } else {
-                $path = dirname($_template->parent->source->filepath) . DS . $file;
+            $parentPath = $_template->parent->source->filepath;
+            // if we are inside an {block} tag the path must be relative to template of {block}
+            if (isset($_template->ext->_inheritance) && $path = $_template->ext->_inheritance->getBlockFilepath()) {
+                $parentPath = $path;
             }
             // normalize path
-            $path = $source->smarty->_realpath($path);
+            $path = $source->smarty->_realpath(dirname($parentPath) . DS . $file);
             // files relative to a template only get one shot
             return is_file($path) ? $path : false;
         }
diff --git a/libs/sysplugins/smarty_internal_runtime_inheritance.php b/libs/sysplugins/smarty_internal_runtime_inheritance.php
index 96eba319..eefc899c 100644
--- a/libs/sysplugins/smarty_internal_runtime_inheritance.php
+++ b/libs/sysplugins/smarty_internal_runtime_inheritance.php
@@ -45,19 +45,19 @@ class Smarty_Internal_Runtime_Inheritance
     public $tplIndex = - 1;
 
     /**
-     * current block nesting level
-     *
-     * @var int
-     */
-    public $blockNesting = 0;
-
-    /**
-     * Array of source template names
+     * Array of template source objects
      * - key template index
      *
-     * @var string[]
+     * @var Smarty_Template_Source[]
      */
-    public $templateResource = array();
+    public $sources = array();
+
+    /**
+     * Call stack of block objects
+     *
+     * @var Smarty_Internal_Block[]
+     */
+    public $blockCallStack = array();
 
     /**
      * Initialize inheritance
@@ -87,7 +87,7 @@ class Smarty_Internal_Runtime_Inheritance
         // in parent state {include} will not increment template index
         if ($this->state != 3) {
             $this->tplIndex ++;
-            $this->templateResource[ $this->tplIndex ] = $tpl->template_resource;
+            $this->sources[ $this->tplIndex ] = $tpl->source;
         }
         // if state was waiting for parent change state to parent
         if ($this->state == 2) {
@@ -109,4 +109,37 @@ class Smarty_Internal_Runtime_Inheritance
             $this->state = 2;
         }
     }
+
+    /**
+     * Return source filepath of current {block} if not in sub-template
+     *
+     * @return bool|string  filepath or false
+     */
+    public function getBlockFilepath()
+    {
+        if (!empty($this->blockCallStack) && $this->blockCallStack[ 0 ]->subTemplateNesting === 0) {
+            return $this->sources[ $this->blockCallStack[ 0 ]->tplIndex ]->filepath;
+        }
+        return false;
+    }
+
+    /**
+     *  Increment sub-template nesting count in current block object
+     */
+    public function subTemplateStart()
+    {
+        if (!empty($this->blockCallStack)) {
+            $this->blockCallStack[ 0 ]->subTemplateNesting ++;
+        }
+    }
+
+    /**
+     *  Decrement sub-template nesting count in current block object
+     */
+    public function subTemplateEnd()
+    {
+        if (!empty($this->blockCallStack)) {
+            $this->blockCallStack[ 0 ]->subTemplateNesting --;
+        }
+    }
 }
diff --git a/libs/sysplugins/smarty_internal_template.php b/libs/sysplugins/smarty_internal_template.php
index 02ce83d8..7a9a7d1e 100644
--- a/libs/sysplugins/smarty_internal_template.php
+++ b/libs/sysplugins/smarty_internal_template.php
@@ -101,7 +101,6 @@ class Smarty_Internal_Template extends Smarty_Internal_TemplateBase
      */
     public $endRenderCallbacks = array();
 
-
     /**
      * Create template data object
      * Some of the global Smarty settings copied to template scope
@@ -330,7 +329,10 @@ class Smarty_Internal_Template extends Smarty_Internal_TemplateBase
             }
         }
         $tpl->_cache = array();
-        $saved_inheritance = isset($tpl->ext->_inheritance) ? $tpl->ext->_inheritance : null;
+        if (isset($tpl->ext->_inheritance)) {
+            $saved_inheritance = $tpl->ext->_inheritance;
+            $saved_inheritance->subTemplateStart();
+        }
         if (isset($uid)) {
             if ($smarty->debugging) {
                 $smarty->_debug->start_template($tpl);
@@ -349,6 +351,7 @@ class Smarty_Internal_Template extends Smarty_Internal_TemplateBase
             }
         }
         if (isset($saved_inheritance)) {
+            $saved_inheritance->subTemplateEnd();
             $tpl->ext->_inheritance = $saved_inheritance;
         } else {
             unset($tpl->ext->_inheritance);