diff --git a/lib/coffee_script/CoffeeScript.tmbundle/Syntaxes/CoffeeScript.tmLanguage b/lib/coffee_script/CoffeeScript.tmbundle/Syntaxes/CoffeeScript.tmLanguage
index 990a2368..df92adbf 100644
--- a/lib/coffee_script/CoffeeScript.tmbundle/Syntaxes/CoffeeScript.tmLanguage
+++ b/lib/coffee_script/CoffeeScript.tmbundle/Syntaxes/CoffeeScript.tmLanguage
@@ -39,7 +39,7 @@
 			<key>comment</key>
 			<string>match stuff like: funcName: =&gt; … </string>
 			<key>match</key>
-			<string>([a-zA-Z_?.$]*)\s*(=|:)\s*([\w,\s]*?)\s*(=&gt;)</string>
+			<string>([a-zA-Z0-9_?.$]*)\s*(=|:)\s*([\w,\s]*?)\s*(=&gt;)</string>
 			<key>name</key>
 			<string>meta.function.coffee</string>
 		</dict>
@@ -60,7 +60,7 @@
 			<key>comment</key>
 			<string>match stuff like: a =&gt; … </string>
 			<key>match</key>
-			<string>([a-zA-Z_?., $]*)\s*(=&gt;)</string>
+			<string>([a-zA-Z0-9_?., $]*)\s*(=&gt;)</string>
 			<key>name</key>
 			<string>meta.inline.function.coffee</string>
 		</dict>
diff --git a/lib/coffee_script/grammar.y b/lib/coffee_script/grammar.y
index 6fd9df12..b8089cdb 100644
--- a/lib/coffee_script/grammar.y
+++ b/lib/coffee_script/grammar.y
@@ -33,7 +33,7 @@ prechigh
   right    THROW FOR IN WHILE NEW SUPER
   left     UNLESS IF ELSE EXTENDS
   left     ASSIGN '||=' '&&='
-  right    RETURN
+  right    RETURN INDENT
   left     OUTDENT
 preclow
 
@@ -88,8 +88,8 @@ rule
   ;
 
   Block:
-    Expression                        { result = Expressions.new(val) }
-  | INDENT Expressions Outdent        { result = val[1] }
+    # Expression                        { result = Expressions.new(val) }
+    INDENT Expressions Outdent        { result = val[1] }
   ;
 
   Outdent:
diff --git a/lib/coffee_script/lexer.rb b/lib/coffee_script/lexer.rb
index b0fb531d..abd45592 100644
--- a/lib/coffee_script/lexer.rb
+++ b/lib/coffee_script/lexer.rb
@@ -131,17 +131,16 @@ module CoffeeScript
       size = indent.size
       return literal_token if size == @indent
       if size > @indent
-        tag = :INDENT
+        token(:INDENT, size - @indent)
         @indent = size
         @indents << @indent
       else
-        tag = :OUTDENT
+        token(:OUTDENT, @indent - size)
         @indents.pop while @indents.last && ((@indents.last || 0) > size)
         @indent = @indents.last || 0
       end
       @line += 1
       @i += (size + 1)
-      token(tag, size)
     end
 
     # Matches and consumes non-meaningful whitespace.
@@ -150,18 +149,20 @@ module CoffeeScript
       @i += whitespace.length
     end
 
+    # Multiple newlines get merged together.
+    # Use a trailing \ to escape newlines.
+    def newline_token(newlines)
+      return false unless newlines = @chunk[NEWLINE, 1]
+      @line += newlines.length
+      token("\n", "\n") unless ["\n", "\\"].include?(last_value)
+      @tokens.pop if last_value == "\\"
+      @i += newlines.length
+    end
+
     # We treat all other single characters as a token. Eg.: ( ) , . !
     # Multi-character operators are also literal tokens, so that Racc can assign
-    # the proper order of operations. Multiple newlines get merged together.
-    # Use a trailing \ to escape newlines.
+    # the proper order of operations.
     def literal_token
-      value = @chunk[NEWLINE, 1]
-      if value
-        @line += value.length
-        token("\n", "\n") unless ["\n", "\\"].include?(last_value)
-        @tokens.pop if last_value == "\\"
-        return @i += value.length
-      end
       value = @chunk[OPERATOR, 1]
       tag_parameters if value && value.match(CODE)
       value ||= @chunk[0,1]
diff --git a/test/fixtures/generation/whitespace.coffee b/test/fixtures/generation/whitespace.coffee
new file mode 100644
index 00000000..7a5bfaf7
--- /dev/null
+++ b/test/fixtures/generation/whitespace.coffee
@@ -0,0 +1,6 @@
+# test
+f1: x =>
+  x * x
+  f2: y =>
+    y * x
+