diff --git a/src/compiler/parser.ts b/src/compiler/parser.ts
index a0e992098f7..caa62b7ae9e 100644
--- a/src/compiler/parser.ts
+++ b/src/compiler/parser.ts
@@ -3916,14 +3916,14 @@ module ts {
         }
 
         function parseSourceElement() {
-            return parseSourceElementOrModuleElement(ModifierContext.SourceElements);
+            return parseSourceElementOrModuleElement(ModifierContext.SourceElements, /*allowLetAndConstDeclarations*/ false);
         }
 
         function parseModuleElement() {
-            return parseSourceElementOrModuleElement(ModifierContext.ModuleElements);
+            return parseSourceElementOrModuleElement(ModifierContext.ModuleElements, /*allowLetAndConstDeclarations*/ true);
         }
 
-        function parseSourceElementOrModuleElement(modifierContext: ModifierContext): Statement {
+        function parseSourceElementOrModuleElement(modifierContext: ModifierContext, allowLetAndConstDeclarations: boolean): Statement {
             if (isDeclaration()) {
                 return parseDeclaration(modifierContext);
             }
@@ -3931,7 +3931,7 @@ module ts {
             var statementStart = scanner.getTokenPos();
             var statementFirstTokenLength = scanner.getTextPos() - statementStart;
             var errorCountBeforeStatement = file.syntacticErrors.length;
-            var statement = parseStatement(/*allowLetAndConstDeclarations*/ false);
+            var statement = parseStatement(allowLetAndConstDeclarations);
 
             if (inAmbientContext && file.syntacticErrors.length === errorCountBeforeStatement) {
                 grammarErrorAtPos(statementStart, statementFirstTokenLength, Diagnostics.Statements_are_not_allowed_in_ambient_contexts);
diff --git a/tests/baselines/reference/letDeclarations-scopes.errors.txt b/tests/baselines/reference/letDeclarations-scopes.errors.txt
index df54e0fc3c4..5c89ea98049 100644
--- a/tests/baselines/reference/letDeclarations-scopes.errors.txt
+++ b/tests/baselines/reference/letDeclarations-scopes.errors.txt
@@ -105,12 +105,12 @@ tests/cases/compiler/letDeclarations-scopes.ts(28,7): error TS2410: All symbols
     
     var F2 = () => {
         let l = 0;
-    n = l;
+        n = l;
     };
     
     var F3 = function () {
         let l = 0;
-    n = l;
+        n = l;
     };
     
     // modules
@@ -120,8 +120,10 @@ tests/cases/compiler/letDeclarations-scopes.ts(28,7): error TS2410: All symbols
     
         {
            let l = false;
-            var b2: boolean = l;
+           var b2: boolean = l;
         }
+    
+        lable: let l2 = 0;
     }
     
     // methods
@@ -152,10 +154,10 @@ tests/cases/compiler/letDeclarations-scopes.ts(28,7): error TS2410: All symbols
     var o = {
         f() {
             let l = 0;
-    n = l;
+            n = l;
         },
-    f2: () => {
+        f2: () => {
             let l = 0;
-        n = l;
+            n = l;
         }
     }
\ No newline at end of file
diff --git a/tests/baselines/reference/letDeclarations-scopes.js b/tests/baselines/reference/letDeclarations-scopes.js
index 59d42368b6c..fb16a03f569 100644
--- a/tests/baselines/reference/letDeclarations-scopes.js
+++ b/tests/baselines/reference/letDeclarations-scopes.js
@@ -100,12 +100,12 @@ function F() {
 
 var F2 = () => {
     let l = 0;
-n = l;
+    n = l;
 };
 
 var F3 = function () {
     let l = 0;
-n = l;
+    n = l;
 };
 
 // modules
@@ -115,8 +115,10 @@ module m {
 
     {
        let l = false;
-        var b2: boolean = l;
+       var b2: boolean = l;
     }
+
+    lable: let l2 = 0;
 }
 
 // methods
@@ -147,11 +149,11 @@ class C {
 var o = {
     f() {
         let l = 0;
-n = l;
+        n = l;
     },
-f2: () => {
+    f2: () => {
         let l = 0;
-    n = l;
+        n = l;
     }
 }
 
@@ -251,6 +253,7 @@ var m;
         let l = false;
         var b2 = l;
     }
+    lable: let l2 = 0;
 })(m || (m = {}));
 // methods
 var C = (function () {
diff --git a/tests/cases/compiler/letDeclarations-scopes.ts b/tests/cases/compiler/letDeclarations-scopes.ts
index 0393f0f295b..93f4ce5b4ed 100644
--- a/tests/cases/compiler/letDeclarations-scopes.ts
+++ b/tests/cases/compiler/letDeclarations-scopes.ts
@@ -100,12 +100,12 @@ function F() {
 
 var F2 = () => {
     let l = 0;
-n = l;
+    n = l;
 };
 
 var F3 = function () {
     let l = 0;
-n = l;
+    n = l;
 };
 
 // modules
@@ -115,8 +115,10 @@ module m {
 
     {
        let l = false;
-        var b2: boolean = l;
+       var b2: boolean = l;
     }
+
+    lable: let l2 = 0;
 }
 
 // methods
@@ -147,10 +149,10 @@ class C {
 var o = {
     f() {
         let l = 0;
-n = l;
+        n = l;
     },
-f2: () => {
+    f2: () => {
         let l = 0;
-    n = l;
+        n = l;
     }
 }
\ No newline at end of file