diff --git a/org.eclipse.jdt.core.tests.compiler/src/org/eclipse/jdt/core/tests/compiler/regression/NullReferenceTest.java b/org.eclipse.jdt.core.tests.compiler/src/org/eclipse/jdt/core/tests/compiler/regression/NullReferenceTest.java
index 5ea3543..94bb6ac 100644
--- a/org.eclipse.jdt.core.tests.compiler/src/org/eclipse/jdt/core/tests/compiler/regression/NullReferenceTest.java
+++ b/org.eclipse.jdt.core.tests.compiler/src/org/eclipse/jdt/core/tests/compiler/regression/NullReferenceTest.java
@@ -47,7 +47,7 @@
 // Only the highest compliance level is run; add the VM argument
 // -Dcompliance=1.4 (for example) to lower it if needed
 static {
-//		TESTS_NAMES = new String[] { "test358827" };
+//		TESTS_NAMES = new String[] { "testBug360328" };
 //		TESTS_NUMBERS = new int[] { 561 };
 //		TESTS_RANGE = new int[] { 1, 2049 };
 }
@@ -15124,4 +15124,67 @@
 			true,
 			compilerOptions);
 }
+// Bug 360328 - [compiler][null] detect null problems in nested code (local class inside a loop)
+public void testBug360328() {
+	Map customOptions = getCompilerOptions();
+	customOptions.put(CompilerOptions.OPTION_ReportNullReference, CompilerOptions.ERROR);
+	customOptions.put(CompilerOptions.OPTION_ReportRedundantNullCheck, CompilerOptions.ERROR);
+	runNegativeTest(
+		true, /* flushOutputDir */
+		new String[] {
+			"X.java",
+			"public class X {\n" +
+			"    void print4() {\n" +
+			"        final String s1 = \"\";\n" +
+			"        for (int i=0; i<4; i++)\n" +
+			"            new Runnable() {\n" +
+			"                public void run() {\n" +
+			"                     if (s1 != null)\n" +
+			"                         s1.toString();\n" +
+			"                }\n" +
+			"            }.run();\n" + 
+			"    }\n" +
+			"    void print16(boolean b) {\n" +
+			"        final String s3 = b ? null : \"\";\n" +
+			"        for (int i=0; i<16; i++)\n" +
+			"            new Runnable() {\n" +
+			"                public void run() {\n" +
+			"                     s3.toString();\n" +
+			"                }\n" +
+			"            }.run();\n" + 
+			"    }\n" +
+			"    void print23() {\n" +
+			"        final String s23 = null;\n" +
+			"        for (int i=0; i<23; i++)\n" +
+			"            new Runnable() {\n" +
+			"                public void run() {\n" +
+			"                     s23.toString();\n" +
+			"                }\n" +
+			"            }.run();\n" + 
+			"    }\n" +
+			"}\n",
+
+		},
+		null, /* classLibs */
+		customOptions,
+		"----------\n" + 
+		"1. ERROR in X.java (at line 7)\n" + 
+		"	if (s1 != null)\n" + 
+		"	    ^^\n" + 
+		"Redundant null check: The variable s1 cannot be null at this location\n" + 
+		"----------\n" + 
+		"2. ERROR in X.java (at line 17)\n" + 
+		"	s3.toString();\n" + 
+		"	^^\n" + 
+		"Potential null pointer access: The variable s3 may be null at this location\n" + 
+		"----------\n" + 
+		"3. ERROR in X.java (at line 26)\n" + 
+		"	s23.toString();\n" + 
+		"	^^^\n" + 
+		"Null pointer access: The variable s23 can only be null at this location\n" + 
+		"----------\n",
+		"",/* expected output */
+		"",/* expected error */
+	    JavacTestOptions.Excuse.EclipseWarningConfiguredAsError);
+}
 }
\ No newline at end of file
diff --git a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/AbstractMethodDeclaration.java b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/AbstractMethodDeclaration.java
index 228e6e8..995b093 100644
--- a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/AbstractMethodDeclaration.java
+++ b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/AbstractMethodDeclaration.java
@@ -12,8 +12,6 @@
 
 import org.eclipse.jdt.core.compiler.*;
 import org.eclipse.jdt.internal.compiler.*;
-import org.eclipse.jdt.internal.compiler.flow.FlowInfo;
-import org.eclipse.jdt.internal.compiler.flow.InitializationFlowContext;
 import org.eclipse.jdt.internal.compiler.impl.*;
 import org.eclipse.jdt.internal.compiler.classfmt.ClassFileConstants;
 import org.eclipse.jdt.internal.compiler.codegen.*;
@@ -68,8 +66,6 @@
 				throw new AbortMethod(this.compilationResult, problem);
 		}
 	}
-
-	public abstract void analyseCode(ClassScope classScope, InitializationFlowContext initializationContext, FlowInfo info);
 
 	/**
 	 * Bind and add argument's binding into the scope of the method
diff --git a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/MethodDeclaration.java b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/MethodDeclaration.java
index 5b60ba3..5a5c24c 100644
--- a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/MethodDeclaration.java
+++ b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/MethodDeclaration.java
@@ -16,8 +16,8 @@
 import org.eclipse.jdt.internal.compiler.CompilationResult;
 import org.eclipse.jdt.internal.compiler.classfmt.ClassFileConstants;
 import org.eclipse.jdt.internal.compiler.flow.ExceptionHandlingFlowContext;
+import org.eclipse.jdt.internal.compiler.flow.FlowContext;
 import org.eclipse.jdt.internal.compiler.flow.FlowInfo;
-import org.eclipse.jdt.internal.compiler.flow.InitializationFlowContext;
 import org.eclipse.jdt.internal.compiler.impl.CompilerOptions;
 import org.eclipse.jdt.internal.compiler.lookup.Binding;
 import org.eclipse.jdt.internal.compiler.lookup.ClassScope;
@@ -44,7 +44,7 @@
 		super(compilationResult);
 	}
 
-	public void analyseCode(ClassScope classScope, InitializationFlowContext initializationContext, FlowInfo flowInfo) {
+	public void analyseCode(ClassScope classScope, FlowContext flowContext, FlowInfo flowInfo) {
 		// starting of the code analysis for methods
 		if (this.ignoreFurtherInvestigation)
 			return;
@@ -72,7 +72,7 @@
 
 			ExceptionHandlingFlowContext methodContext =
 				new ExceptionHandlingFlowContext(
-					initializationContext,
+					flowContext,
 					this,
 					this.binding.thrownExceptions,
 					null,
diff --git a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/TypeDeclaration.java b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/TypeDeclaration.java
index b475932..b7ee3cf 100644
--- a/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/TypeDeclaration.java
+++ b/org.eclipse.jdt.core/compiler/org/eclipse/jdt/internal/compiler/ast/TypeDeclaration.java
@@ -684,8 +684,9 @@
 			if (method.ignoreFurtherInvestigation)
 				continue;
 			if (method.isInitializationMethod()) {
+				// pass down the appropriate initializerContext:
 				if (method.isStatic()) { // <clinit>
-					method.analyseCode(
+					((Clinit)method).analyseCode(
 						this.scope,
 						staticInitializerContext,
 						staticFieldInfo.unconditionalInits().discardNonFieldInitializations().addInitializationsFrom(outerInfo));
@@ -693,7 +694,9 @@
 					((ConstructorDeclaration)method).analyseCode(this.scope, initializerContext, constructorInfo.copy(), flowInfo.reachMode());
 				}
 			} else { // regular method
-				method.analyseCode(this.scope, null, flowInfo.copy());
+				// pass down the parent flowContext UNLESS it is an initializer context:
+				FlowContext parentContext = (flowContext instanceof InitializationFlowContext) ? null : flowContext;
+				((MethodDeclaration)method).analyseCode(this.scope, parentContext, flowInfo.copy());
 			}
 		}
 	}