diff --git a/clang/Parse/ParseStmt.cpp b/clang/Parse/ParseStmt.cpp
index dfedc9da7576..4f176386ce86 100644
--- a/clang/Parse/ParseStmt.cpp
+++ b/clang/Parse/ParseStmt.cpp
@@ -76,10 +76,23 @@ ParseNextStatement:
   // the token to end in a semicolon (in which case SemiError should be set),
   // or they directly 'return;' if not.
   switch (Tok.getKind()) {
+  case tok::identifier:             // C99 6.8.1: labeled-statement
+    // identifier ':' statement
+    // declaration                  (if !OnlyStatement)
+    // expression[opt] ';'
+    return ParseIdentifierStatement(OnlyStatement);
+
   default:
-    Diag(Tok, OnlyStatement ? diag::err_expected_statement :
-                              diag::err_expected_statement_declaration);
-    SkipUntil(tok::semi);
+    if (!OnlyStatement && isDeclarationSpecifier()) {
+      // TODO: warn/disable if declaration is in the middle of a block and !C99.
+      ParseDeclaration(Declarator::BlockContext);
+      return;
+    } else if (Tok.getKind() == tok::r_brace) {
+      Diag(Tok, diag::err_expected_statement);
+    } else {
+      // expression[opt] ';'
+      ParseExpression();
+    }
     return;
     
   case tok::kw_case:                // C99 6.8.1: labeled-statement
@@ -140,8 +153,6 @@ ParseNextStatement:
     ParseReturnStatement();
     SemiError = "return statement";
     break;
-    
-    // TODO: Handle OnlyStatement..
   }
   
   // If we reached this code, the statement must end in a semicolon.
@@ -153,6 +164,17 @@ ParseNextStatement:
   }
 }
 
+/// ParseIdentifierStatement - Because we don't have two-token lookahead, we
+/// have a bit of a quandry here.  Reading the identifier is necessary to see if
+/// there is a ':' after it.  If there is, this is a label, regardless of what
+/// else the identifier can mean.  If not, this is either part of a declaration
+/// (if the identifier is a type-name) or part of an expression.
+void Parser::ParseIdentifierStatement(bool OnlyStatement) {
+  
+  assert(0);
+  
+}
+
 /// ParseCaseStatement
 ///       labeled-statement:
 ///         'case' constant-expression ':' statement
diff --git a/clang/include/clang/Basic/DiagnosticKinds.def b/clang/include/clang/Basic/DiagnosticKinds.def
index 9d9d73c1d0da..97cf5e79863d 100644
--- a/clang/include/clang/Basic/DiagnosticKinds.def
+++ b/clang/include/clang/Basic/DiagnosticKinds.def
@@ -278,8 +278,6 @@ DIAG(err_expected_after_declarator, ERROR,
      "expected '=', ',', ';', 'asm', or '__attribute__' after declarator")
 DIAG(err_expected_statement, ERROR,
      "expected statement")
-DIAG(err_expected_statement_declaration, ERROR,
-     "expected statement or declaration")
 DIAG(err_expected_lparen_after, ERROR,
      "expected '(' after '%s'")
 DIAG(err_expected_while, ERROR,
diff --git a/clang/include/clang/Parse/Parser.h b/clang/include/clang/Parse/Parser.h
index 6424e825ec76..b476867707b2 100644
--- a/clang/include/clang/Parse/Parser.h
+++ b/clang/include/clang/Parse/Parser.h
@@ -160,6 +160,7 @@ private:
   // C99 6.8: Statements and Blocks.
   void ParseStatement() { ParseStatementOrDeclaration(true); }
   void ParseStatementOrDeclaration(bool OnlyStatement = false);
+  void ParseIdentifierStatement(bool OnlyStatement);
   void ParseCaseStatement();
   void ParseDefaultStatement();
   void ParseCompoundStatement();
diff --git a/clang/test/Parser/statements.c b/clang/test/Parser/statements.c
index 8c48d58b5704..729fe31b6bff 100644
--- a/clang/test/Parser/statements.c
+++ b/clang/test/Parser/statements.c
@@ -29,3 +29,11 @@ int test3() {
       ;     
   }
 }
+
+int test4() {
+  if (0);
+  
+  int X;  // declaration in a block.
+  
+  if (0);
+}