diff --git a/change_log.txt b/change_log.txt
index 602794e3..71719441 100644
--- a/change_log.txt
+++ b/change_log.txt
@@ -1,4 +1,5 @@
 03/28/2009
+- {block} tags can be nested now
 - md5 hash function replace with crc32 for speed optimization
 - file order for exted resource inverted
 - clear_compiled_tpl and clear_cache_all will not touch .svn folder any longer
diff --git a/libs/sysplugins/internal.compile_block.php b/libs/sysplugins/internal.compile_block.php
index 42373769..67077ada 100644
--- a/libs/sysplugins/internal.compile_block.php
+++ b/libs/sysplugins/internal.compile_block.php
@@ -26,7 +26,8 @@ class Smarty_Internal_Compile_Block extends Smarty_Internal_CompileBase {
         $this->optional_attributes = array('assign'); 
         // check and get attributes
         $_attr = $this->_get_attributes($args);
-        $this->_open_tag('block', $_attr);
+        $save = array($_attr, $compiler->template->extracted_compiled_code, $compiler->template->extract_code); 
+        $this->_open_tag('block', $save);
         $compiler->template->extract_code = true;
         $compiler->template->extracted_compiled_code = '';
         $compiler->template->has_code = false; 
diff --git a/libs/sysplugins/internal.compile_blockclose.php b/libs/sysplugins/internal.compile_blockclose.php
index 6236d3c0..befed4bb 100644
--- a/libs/sysplugins/internal.compile_blockclose.php
+++ b/libs/sysplugins/internal.compile_blockclose.php
@@ -28,18 +28,19 @@ class Smarty_Internal_Compile_BlockClose extends Smarty_Internal_CompileBase {
         // check and get attributes
         $this->optional_attributes = array('name');
         $_attr = $this->_get_attributes($args);
-        $saved_attr = $this->_close_tag(array('block')); 
+        $saved_data = $this->_close_tag(array('block')); 
         // if name does match to opening tag
-        if (isset($_attr['name']) && $saved_attr['name'] != $_attr['name']) {
-            $this->compiler->trigger_template_error('mismatching name attributes "' . $saved_attr['name'] . '" and "' . $_attr['name'] . '"');
+        if (isset($_attr['name']) && $saved_data[0]['name'] != $_attr['name']) {
+            $this->compiler->trigger_template_error('mismatching name attributes "' . $saved_data[0]['name'] . '" and "' . $_attr['name'] . '"');
         } 
-        $_name = trim($saved_attr['name'], "'");
+        $_name = trim($saved_data[0]['name'], "'");
         if (!empty($compiler->template->block_data[$_name])) {
             $_output = $compiler->template->block_data[$_name]['compiled'];
         } else {
             $_output = $compiler->template->extracted_compiled_code;
         } 
-        $compiler->template->extracted_compiled_code = '';
+        $compiler->template->extracted_compiled_code = $saved_data[1];
+        $compiler->template->extract_code = $saved_data[2];
         return $_output;
     } 
 }