diff --git a/PHP Markdown Extra Readme.text b/PHP Markdown Extra Readme.text
index 06212d9..f65b323 100644
--- a/PHP Markdown Extra Readme.text	
+++ b/PHP Markdown Extra Readme.text	
@@ -216,6 +216,9 @@ Latest Extra:
 *	Fixed an issue preventing fenced code blocks indented inside lists items 
 	and elsewhere from being interpreted correctly.
 
+*	Fixed an issue where HTML tags inside fenced code blocks were sometime
+	not encoded with entities.
+
 
 1.0.1n (10 Oct 2009):
 
diff --git a/markdown.php b/markdown.php
index a908922..6962eae 100644
--- a/markdown.php
+++ b/markdown.php
@@ -1947,17 +1947,9 @@ class MarkdownExtra_Parser extends Markdown_Parser {
 				}
 			}
 			#
-			# Check for: Indented code block.
-			#
-			else if ($tag{0} == "\n" || $tag{0} == " ") {
-				# Indented code block: pass it unchanged, will be handled 
-				# later.
-				$parsed .= $tag;
-			}
-			#
 			# Check for: Fenced code block marker.
 			#
-			else if ($tag{0} == "~") {
+			else if (preg_match('{^\n?[ ]{0,'.($indent+3).'}~}', $tag)) {
 				# Fenced code block marker: find matching end marker.
 				$tag_re = preg_quote(trim($tag));
 				if (preg_match('{^(?>.*\n)+?[ ]{0,'.($indent).'}'.$tag_re.'[ ]*\n}', $text, 
@@ -1973,6 +1965,14 @@ class MarkdownExtra_Parser extends Markdown_Parser {
 				}
 			}
 			#
+			# Check for: Indented code block.
+			#
+			else if ($tag{0} == "\n" || $tag{0} == " ") {
+				# Indented code block: pass it unchanged, will be handled 
+				# later.
+				$parsed .= $tag;
+			}
+			#
 			# Check for: Opening Block level tag or
 			#            Opening Context Block tag (like ins and del) 
 			#               used as a block tag (tag is alone on it's line).