diff --git a/lib/coffee-script/lexer.js b/lib/coffee-script/lexer.js
index f022de68..ee2d4b6c 100644
--- a/lib/coffee-script/lexer.js
+++ b/lib/coffee-script/lexer.js
@@ -267,22 +267,22 @@
           }
         }
         if (indent) {
-          indentRegex = RegExp("^" + indent, "gm");
+          indentRegex = RegExp("\\n" + indent, "g");
         }
         this.mergeInterpolationTokens(tokens, {
           delimiter: delimiter
         }, (function(_this) {
           return function(value, i) {
             value = _this.formatString(value);
+            if (indentRegex) {
+              value = value.replace(indentRegex, '\n');
+            }
             if (i === 0) {
               value = value.replace(LEADING_BLANK_LINE, '');
             }
             if (i === $) {
               value = value.replace(TRAILING_BLANK_LINE, '');
             }
-            if (indentRegex) {
-              value = value.replace(indentRegex, '');
-            }
             return value;
           };
         })(this));
diff --git a/src/lexer.coffee b/src/lexer.coffee
index 3e55780f..e776c91d 100644
--- a/src/lexer.coffee
+++ b/src/lexer.coffee
@@ -248,12 +248,12 @@ exports.Lexer = class Lexer
       while match = HEREDOC_INDENT.exec doc
         attempt = match[1]
         indent = attempt if indent is null or 0 < attempt.length < indent.length
-      indentRegex = /// ^#{indent} ///gm if indent
+      indentRegex = /// \n#{indent} ///g if indent
       @mergeInterpolationTokens tokens, {delimiter}, (value, i) =>
         value = @formatString value
+        value = value.replace indentRegex, '\n' if indentRegex
         value = value.replace LEADING_BLANK_LINE,  '' if i is 0
         value = value.replace TRAILING_BLANK_LINE, '' if i is $
-        value = value.replace indentRegex, '' if indentRegex
         value
     else
       @mergeInterpolationTokens tokens, {delimiter}, (value, i) =>
diff --git a/test/strings.coffee b/test/strings.coffee
index 6eb314d5..0f1975e2 100644
--- a/test/strings.coffee
+++ b/test/strings.coffee
@@ -390,3 +390,13 @@ test "#3795: Escape otherwise invalid characters", ->
   eq """#{a}
""", 'a\u2029'
   eq """#{a}\0\
       1""", 'a\0' + '1'
+
+test "#4314: Whitespace less than or equal to stripped indentation", ->
+  # The odd indentation is intentional here, to test 1-space indentation.
+  eq ' ', """
+ #{} #{}
+"""
+
+  eq '1 2  3   4    5     end\na 0     b', """
+    #{1} #{2}  #{3}   #{4}    #{5}     end
+    a #{0}     b"""