--- a/dmd/SymOffExp.d	Sat Sep 11 13:03:39 2010 +0100
+++ b/dmd/SymOffExp.d	Mon Sep 13 22:19:42 2010 +0100
@@ -20,6 +20,7 @@
 import dmd.ErrorExp;
 import dmd.TY;
 import dmd.TOK;
+import dmd.STC;
 
 import dmd.backend.Symbol;
 import dmd.backend.Util;
@@ -58,14 +59,14 @@
 		VarDeclaration v = var.isVarDeclaration();
 		if (v)
 		{
-			if (!v.isDataseg())
+			if (!v.isDataseg() && !(v.storage_class & (STC.STCref | STC.STCout)))
 			{   /* BUG: This should be allowed:
 				 *   void foo()
 				 *   { int a;
 				 *     int* bar() { return &a; }
 				 *   }
 				 */
-				error("escaping reference to local variable %s", v.toChars());
+				error("escaping reference to local %s", v.toChars());
 			}
 		}
 	}