diff --git a/lib/haml/engine.rb b/lib/haml/engine.rb
index 3420f525..8a0e6468 100644
--- a/lib/haml/engine.rb
+++ b/lib/haml/engine.rb
@@ -200,9 +200,11 @@ END
       old_index = nil
       old_spaces = nil
       old_tabs = nil
+      old_uline = nil
       (@template + "\n-#").each_with_index do |line, index|
         spaces, tabs = count_soft_tabs(line)
-        line.strip!
+        uline = line.lstrip[0...-1]
+        line = uline.rstrip
         
         if !line.empty?
           if old_line
@@ -222,7 +224,7 @@ END
               end
 
               if flat
-                push_flat(old_line, old_spaces)
+                push_flat(old_uline, old_spaces)
               elsif !line_empty
                 process_line(old_line, old_index, block_opened)
               end
@@ -237,12 +239,14 @@ END
           old_index = index
           old_spaces = spaces
           old_tabs = tabs
+          old_uline = uline
         elsif @flat_spaces != -1
           process_indent(old_tabs, old_line) unless old_line.empty?
 
           if @flat_spaces != -1
             push_flat(old_line, old_spaces)
             old_line = ''
+            old_uline = ''
             old_spaces = 0
           end
         end
diff --git a/test/haml/results/whitespace_handling.xhtml b/test/haml/results/whitespace_handling.xhtml
index c0c75a88..5da76b36 100644
--- a/test/haml/results/whitespace_handling.xhtml
+++ b/test/haml/results/whitespace_handling.xhtml
@@ -36,7 +36,7 @@
   <pre>&#x000A;                                                 ___&#x000A;                                              ,o88888&#x000A;                                           ,o8888888'&#x000A;                     ,:o:o:oooo.        ,8O88Pd8888"&#x000A;                 ,.::.::o:ooooOoOoO. ,oO8O8Pd888'"&#x000A;               ,.:.::o:ooOoOoOO8O8OOo.8OOPd8O8O"&#x000A;              , ..:.::o:ooOoOOOO8OOOOo.FdO8O8"&#x000A;             , ..:.::o:ooOoOO8O888O8O,COCOO"&#x000A;            , . ..:.::o:ooOoOOOO8OOOOCOCO"&#x000A;             . ..:.::o:ooOoOoOO8O8OCCCC"o&#x000A;                . ..:.::o:ooooOoCoCCC"o:o&#x000A;                . ..:.::o:o:,cooooCo"oo:o:&#x000A;             `   . . ..:.:cocoooo"'o:o:::'&#x000A;             .`   . ..::ccccoc"'o:o:o:::'&#x000A;            :.:.    ,c:cccc"':.:.:.:.:.'&#x000A;          ..:.:"'`::::c:"'..:.:.:.:.:.'  http://www.chris.com/ASCII/&#x000A;        ...:.'.:.::::"'    . . . . .'&#x000A;       .. . ....:."' `   .  . . ''&#x000A;     . . . ...."'&#x000A;     .. . ."'     -hrr-&#x000A;    .&#x000A;&#x000A;&#x000A;                                              It's a planet!&#x000A;%strong This shouldn't be bold!&#x000A;</pre>
   <strong>This should!</strong>
   <textarea>
-      ___           ___           ___           ___&#x000A;     /\__\         /\  \         /\__\         /\__\&#x000A;    /:/  /        /::\  \       /::|  |       /:/  /&#x000A;   /:/__/        /:/\:\  \     /:|:|  |      /:/  /&#x000A;  /::\  \ ___   /::\~\:\  \   /:/|:|__|__   /:/  /&#x000A; /:/\:\  /\__\ /:/\:\ \:\__\ /:/ |::::\__\ /:/__/&#x000A; \/__\:\/:/  / \/__\:\/:/  / \/__/~~/:/  / \:\  \&#x000A;      \::/  /       \::/  /        /:/  /   \:\  \&#x000A;      /:/  /        /:/  /        /:/  /     \:\  \&#x000A;     /:/  /        /:/  /        /:/  /       \:\__\&#x000A;     \/__/         \/__/         \/__/         \/__/&#x000A;&#x000A;     Many&#x000A;                   thanks&#x000A;           to&#x000A;                                http://www.network-science.de/ascii/&#x000A;
+      ___           ___           ___           ___ &#x000A;     /\__\         /\  \         /\__\         /\__\&#x000A;    /:/  /        /::\  \       /::|  |       /:/  /&#x000A;   /:/__/        /:/\:\  \     /:|:|  |      /:/  / &#x000A;  /::\  \ ___   /::\~\:\  \   /:/|:|__|__   /:/  /  &#x000A; /:/\:\  /\__\ /:/\:\ \:\__\ /:/ |::::\__\ /:/__/   &#x000A; \/__\:\/:/  / \/__\:\/:/  / \/__/~~/:/  / \:\  \   &#x000A;      \::/  /       \::/  /        /:/  /   \:\  \  &#x000A;      /:/  /        /:/  /        /:/  /     \:\  \ &#x000A;     /:/  /        /:/  /        /:/  /       \:\__\&#x000A;     \/__/         \/__/         \/__/         \/__/&#x000A;&#x000A;     Many&#x000A;                   thanks&#x000A;           to&#x000A;                                http://www.network-science.de/ascii/&#x000A;
     <strong>indeed!</strong>
   </textarea>
 </div>
@@ -88,7 +88,7 @@ foo&#x000A;
   </pre>
   <strong>This should!</strong>
   <textarea>
-      ___           ___           ___           ___&#x000A;     /\__\         /\  \         /\__\         /\__\&#x000A;    /:/  /        /::\  \       /::|  |       /:/  /&#x000A;   /:/__/        /:/\:\  \     /:|:|  |      /:/  /&#x000A;  /::\  \ ___   /::\~\:\  \   /:/|:|__|__   /:/  /&#x000A; /:/\:\  /\__\ /:/\:\ \:\__\ /:/ |::::\__\ /:/__/&#x000A; \/__\:\/:/  / \/__\:\/:/  / \/__/~~/:/  / \:\  \&#x000A;      \::/  /       \::/  /        /:/  /   \:\  \&#x000A;      /:/  /        /:/  /        /:/  /     \:\  \&#x000A;     /:/  /        /:/  /        /:/  /       \:\__\&#x000A;     \/__/         \/__/         \/__/         \/__/&#x000A;&#x000A;     Many&#x000A;                   thanks&#x000A;           to&#x000A;                                http://www.network-science.de/ascii/&#x000A;
+      ___           ___           ___           ___ &#x000A;     /\__\         /\  \         /\__\         /\__\&#x000A;    /:/  /        /::\  \       /::|  |       /:/  /&#x000A;   /:/__/        /:/\:\  \     /:|:|  |      /:/  / &#x000A;  /::\  \ ___   /::\~\:\  \   /:/|:|__|__   /:/  /  &#x000A; /:/\:\  /\__\ /:/\:\ \:\__\ /:/ |::::\__\ /:/__/   &#x000A; \/__\:\/:/  / \/__\:\/:/  / \/__/~~/:/  / \:\  \   &#x000A;      \::/  /       \::/  /        /:/  /   \:\  \  &#x000A;      /:/  /        /:/  /        /:/  /     \:\  \ &#x000A;     /:/  /        /:/  /        /:/  /       \:\__\&#x000A;     \/__/         \/__/         \/__/         \/__/&#x000A;&#x000A;     Many&#x000A;                   thanks&#x000A;           to&#x000A;                                http://www.network-science.de/ascii/&#x000A;
     <strong>indeed!</strong>
   </textarea>
 </div>