Got it working properly with nested block helpers

lib/block_helpers.rb

@@ -17,11 +17,16 @@ def self.inherited(klass)
       klass.parent.class_eval %(
         def #{method_name}(*args, &block)
           renderer = #{klass.name}.new(*args)
-          renderer.send(:helper=, self)
+          top_level_helper = if self.is_a?(BlockHelpers::Base) 
+            self.helper
+          else
+            self
+          end
+          renderer.send(:helper=, top_level_helper)
           body = block ? capture(renderer, &block) : nil
           processed_body = renderer.display(body)
           if processed_body
-            if method(:concat).arity == 2
+            if top_level_helper.method(:concat).arity == 2
               concat processed_body, binding
             else
               concat processed_body

spec/helpers/block_helpers_spec.rb

@@ -281,4 +281,37 @@ def display(body)
     end
   end
 
+  describe "nested block helpers" do
+    it "should define a nested block helper method" do
+      module TestHelperModule
+        class OuterHelper < BlockHelpers::Base
+
+          def egg
+            'bad egg'
+          end
+
+          def display(body)
+            "Outer #{body}"
+          end
+
+          class InnerHelper < BlockHelpers::Base
+            def egg
+              'EGG'
+            end
+            def display(body)
+              "Inner #{body}"
+            end
+          end
+        end
+      end
+      eval_erb(%(
+        <% outer_helper do |o| %>
+          <% o.inner_helper do |i| %>
+            <%= i.egg %>
+          <% end %>
+        <% end %>
+      )).should match_html("Outer Inner EGG")
+    end
+  end
+
 end