diff --git a/gcc/cp/ChangeLog b/gcc/cp/ChangeLog
index b5cba3c7aaf1ef5d1be3a9729431bdb616a43dc0..344083acb49c42c50bae58baf895edc2a04d2b26 100644
--- a/gcc/cp/ChangeLog
+++ b/gcc/cp/ChangeLog
@@ -1,3 +1,9 @@
+2003-10-18  Kriang Lerdsuwanakij  <lerdsuwa@users.sourceforge.net>
+
+	PR c++/12495
+	* pt.c (lookup_template_class): Handle when current_class_type
+	is a local class.
+
 2003-10-17  Kriang Lerdsuwanakij  <lerdsuwa@users.sourceforge.net>
 
 	PR c++/2513
diff --git a/gcc/cp/pt.c b/gcc/cp/pt.c
index ffc347c7a014220268d0312f2304d03cd28b1e9e..32b146f5294bffcb5ee3f87ddf1ed40b4a109e54 100644
--- a/gcc/cp/pt.c
+++ b/gcc/cp/pt.c
@@ -4163,14 +4163,12 @@ lookup_template_class (tree d1,
 	      tree ctx;
 	      
 	      for (ctx = current_class_type; 
-		   ctx; 
-		   ctx = TYPE_CONTEXT (ctx))
-		{
-		  if (TREE_CODE (ctx) == NAMESPACE_DECL)
-		    break;
-		  if (same_type_p (ctx, template_type))
-		    goto found_ctx;
-		}
+		   ctx && TREE_CODE (ctx) != NAMESPACE_DECL;
+		   ctx = (TYPE_P (ctx)
+			  ? TYPE_CONTEXT (ctx)
+			  : DECL_CONTEXT (ctx)))
+		if (TYPE_P (ctx) && same_type_p (ctx, template_type))
+		  goto found_ctx;
 	      
 	      /* We're not in the scope of the class, so the
 		 TEMPLATE_TYPE is not the type we want after all.  */
diff --git a/gcc/testsuite/ChangeLog b/gcc/testsuite/ChangeLog
index 5cfe1e48523132a3438ce551963a3afd9a160953..41e3d856912887f259da49f4658768656e9bfc55 100644
--- a/gcc/testsuite/ChangeLog
+++ b/gcc/testsuite/ChangeLog
@@ -1,3 +1,8 @@
+2003-10-18  Kriang Lerdsuwanakij  <lerdsuwa@users.sourceforge.net>
+
+	PR c++/12495
+	* g++.dg/template/crash21.C: New test.
+
 2003-10-17  Kriang Lerdsuwanakij  <lerdsuwa@users.sourceforge.net>
 
 	PR c++/2513
diff --git a/gcc/testsuite/g++.dg/template/crash12.C b/gcc/testsuite/g++.dg/template/crash12.C
new file mode 100644
index 0000000000000000000000000000000000000000..e2231e06b9174d8bb27da1c30ad45a5ef2f4c1d6
--- /dev/null
+++ b/gcc/testsuite/g++.dg/template/crash12.C
@@ -0,0 +1,16 @@
+// { dg-do compile }
+
+// Origin: rmerkert@alphatech.com
+//         Volker Reichelt <reichelt@gcc.gnu.org>
+
+// PR c++/12495: ICE looking up class template in local class.
+
+template <typename> struct A {};
+
+template <typename T> void foo()
+{
+    struct B
+    {
+        B (const A<T>&);
+    };
+}