diff --git a/ChangeLog b/ChangeLog
index 59f59086f..1b25f08f3 100644
--- a/ChangeLog
+++ b/ChangeLog
@@ -4,6 +4,8 @@
 
 	* env.c, builtin_set.c (env_exist, env_get, env_set, builtin_set): Add support for zero element arrays
 
+	* env.c (env_set): Default scope for variables is innermost function block
+	
 2005-09-25  Axel Liljencrantz  <axel@liljencrantz.se>
 
 	* parser.c: (parse_job, parser_skip_arguemnts, paresr_Test): No semicolon required after else and begin
diff --git a/env.c b/env.c
index 0c3dbf6c4..5d537b408 100644
--- a/env.c
+++ b/env.c
@@ -377,7 +377,7 @@ void env_set( const wchar_t *key,
 	}
 
 	node = env_get_node( key );
-	if( &node->env != 0 )
+	if( node && &node->env != 0 )
 	{
 		e = (var_entry_t *) hash_get( &node->env, 
 									  key );
@@ -425,7 +425,13 @@ void env_set( const wchar_t *key,
 			}
 			else
 			{
+				/*
+				  New variable with unspecified scope. The default scope is the innermost scope that is shadowing
+				*/
 				node = top;
+				while( node->next && !node->new_scope )
+					node = node->next;
+				
 			}
 		}
 	}