Index: compiler/org/eclipse/jdt/internal/compiler/ast/LabeledStatement.java
===================================================================
RCS file: /cvsroot/eclipse/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/LabeledStatement.java,v
--- compiler/org/eclipse/jdt/internal/compiler/ast/LabeledStatement.java	28 Mar 2006 20:29:56 -0000	1.36
+++ compiler/org/eclipse/jdt/internal/compiler/ast/LabeledStatement.java	4 Oct 2006 15:33:38 -0000
@@ -50,8 +50,8 @@ 
 			return flowInfo;
 		} else {
 			LabelFlowContext labelContext;
-			FlowInfo mergedInfo =
-				statement
+			FlowInfo statementInfo, mergedInfo;
+			if (((statementInfo = statement
 					.analyseCode(
 						currentScope,
 						(labelContext =
@@ -61,8 +61,13 @@ 
 								label,
 								(targetLabel = new BranchLabel()),
 								currentScope)),
-						flowInfo)
-					.mergedWith(labelContext.initsOnBreak);
+						flowInfo)).tagBits & FlowInfo.UNREACHABLE) != 0) {
+				// an embedded loop has had no chance to reinject forgotten null info
+				mergedInfo = flowInfo.unconditionalCopy().
+					addInitializationsFrom(labelContext.initsOnBreak);
+			} else {
+				mergedInfo = statementInfo.mergedWith(labelContext.initsOnBreak);
+			}
 			mergedInitStateIndex =
 				currentScope.methodScope().recordInitializationStates(mergedInfo);
 			if ((this.bits & ASTNode.LabelUsed) == 0) {
Index: src/org/eclipse/jdt/core/tests/compiler/regression/NullReferenceTest.java
===================================================================
RCS file: /cvsroot/eclipse/org.eclipse.jdt.core.tests.compiler/src/org/eclipse/jdt/core/tests/compiler/regression/NullReferenceTest.java,v
--- src/org/eclipse/jdt/core/tests/compiler/regression/NullReferenceTest.java	3 Oct 2006 15:19:13 -0000	1.48
+++ src/org/eclipse/jdt/core/tests/compiler/regression/NullReferenceTest.java	4 Oct 2006 15:33:44 -0000
@@ -3739,7 +3739,7 @@ 
 // null analysis - while
 // https://bugs.eclipse.org/bugs/show_bug.cgi?id=134848
 // false positive after nested loop with break to explicit label
-public void _test0456_while_nested_explicit_label() {
+public void test0456_while_nested_explicit_label() {
 	this.runConformTest(
 		new String[] {
 			"X.java",
@@ -3788,6 +3788,29 @@ 
 		"");
 } 
 
+// null analysis - while
+// https://bugs.eclipse.org/bugs/show_bug.cgi?id=134848
+// variant: no label yields no problem
+public void test0458_while_nested_explicit_label() {
+	this.runConformTest(
+		new String[] {
+			"X.java",
+			"public class X {\n" + 
+			"  void foo(Object o) {\n" + 
+			"    while (true) {\n" + 
+			"      if (o != null) {\n" + 
+			"        o.toString();\n" + 
+			"        while (true) {\n" + 
+			"          break;\n" + 
+			"        }\n" + 
+			"        o.toString();\n" + // must not complain here 
+			"      }\n" + 
+			"    }\n" + 
+			"  }\n" + 
+			"}"},
+		"");
+} 
+
 // null analysis -- try/finally
 public void test0500_try_finally() {
 	this.runConformTest(