diff --git a/core/src/main/scala/com/typesafe/tools/mima/core/ClassInfo.scala b/core/src/main/scala/com/typesafe/tools/mima/core/ClassInfo.scala
index ba05eb4a..481248ae 100644
--- a/core/src/main/scala/com/typesafe/tools/mima/core/ClassInfo.scala
+++ b/core/src/main/scala/com/typesafe/tools/mima/core/ClassInfo.scala
@@ -56,6 +56,12 @@ abstract class ClassInfo(val owner: PackageInfo) extends HasDeclarationName with
     else owner.fullName + "." + bytecodeName
   }
 
+  var _innerClasses: Seq[String] = Seq.empty
+  def innerClasses = { ensureLoaded(); _innerClasses }
+
+  var _isTopLevel = true
+  def isTopLevel = { ensureLoaded(); _isTopLevel }
+
   final override def equals(other: Any): Boolean = other match {
     case that: ClassInfo => (that canEqual this) && this.fullName == that.fullName
     case _               => false
@@ -65,10 +71,10 @@ abstract class ClassInfo(val owner: PackageInfo) extends HasDeclarationName with
 
   override def canEqual(other: Any) = other.isInstanceOf[ClassInfo]
 
-  def formattedFullName = formatClassName(if (isObject) fullName.init else fullName)
+  def formattedFullName = formatClassName(if (isModule) fullName.init else fullName)
 
   def declarationPrefix = {
-    if (isObject) "object"
+    if (isModule) "object"
     else if (isTrait) "trait"
     else if (loaded && isInterface) "interface" // java interfaces and traits with no implementation methods
     else "class"
@@ -290,7 +296,7 @@ abstract class ClassInfo(val owner: PackageInfo) extends HasDeclarationName with
     ClassfileParser.isInterface(flags)
   }
 
-  def isObject: Boolean = bytecodeName.endsWith("$")
+  def isModule: Boolean = bytecodeName.endsWith("$")
 
   /** Is this class public? */
   /*
diff --git a/core/src/main/scala/com/typesafe/tools/mima/core/ClassfileParser.scala b/core/src/main/scala/com/typesafe/tools/mima/core/ClassfileParser.scala
index a6319476..837f27a4 100644
--- a/core/src/main/scala/com/typesafe/tools/mima/core/ClassfileParser.scala
+++ b/core/src/main/scala/com/typesafe/tools/mima/core/ClassfileParser.scala
@@ -267,6 +267,17 @@ abstract class ClassfileParser(definitions: Definitions) {
            val attrNameIndex = in.nextChar
            c.sourceFileName = pool.getName(attrNameIndex)
          }
+       } else if (attrName == "InnerClasses") {
+         val entries = in.nextChar.toInt
+         c._innerClasses = (0 until entries).map { _ =>
+           val innerIndex, outerIndex, innerNameIndex = in.nextChar.toInt
+           in.skip(2)
+           if (innerIndex != 0 && outerIndex != 0 && innerNameIndex != 0) {
+             val n = pool.getClassName(innerIndex)
+             if (n == c.bytecodeName) c._isTopLevel = false // an inner class lists itself in InnerClasses
+             if (pool.getClassName(outerIndex) == c.bytecodeName) n else ""
+           } else ""
+         }.filterNot(_.isEmpty)
        } else if (attrName == "Scala" || attrName == "ScalaSig") {
          this.parsedClass.isScala = true
        }
diff --git a/core/src/main/scala/com/typesafe/tools/mima/core/PackageInfo.scala b/core/src/main/scala/com/typesafe/tools/mima/core/PackageInfo.scala
index e55c444c..18e22b3c 100644
--- a/core/src/main/scala/com/typesafe/tools/mima/core/PackageInfo.scala
+++ b/core/src/main/scala/com/typesafe/tools/mima/core/PackageInfo.scala
@@ -1,5 +1,6 @@
 package com.typesafe.tools.mima.core
 
+import scala.annotation.tailrec
 import scala.tools.nsc.io.AbstractFile
 import scala.tools.nsc.util.ClassPath
 import collection.mutable
@@ -65,25 +66,23 @@ abstract class PackageInfo(val owner: PackageInfo) {
 
   lazy val accessibleClasses: Set[ClassInfo] = {
     /** Fixed point iteration for finding all accessible classes. */
-    def accessibleClassesUnder(prefix: Set[ClassInfo]): Set[ClassInfo] = {
-      val vclasses = (classes.valuesIterator filter (isAccessible(_, prefix))).toSet
-      if (vclasses.isEmpty) vclasses
-      else vclasses union accessibleClassesUnder(vclasses)
+    @tailrec
+    def accessibleClassesUnder(prefix: Set[ClassInfo], found: Set[ClassInfo]): Set[ClassInfo] = {
+      val vclasses = (classes.valuesIterator.filter(isAccessible(_, prefix))).toSet
+      if (vclasses.isEmpty) found
+      else accessibleClassesUnder(vclasses, vclasses union found)
     }
 
     def isAccessible(clazz: ClassInfo, prefix: Set[ClassInfo]) = {
       def isReachable = {
         if (clazz.isSynthetic) false
-        else {
-          val idx = clazz.decodedName.lastIndexOf("$")
-          if (idx < 0) prefix.isEmpty // class name contains no $
-          else prefix exists (_.decodedName == clazz.decodedName.substring(0, idx)) // prefix before dollar is an accessible class detected previously
-        }
+        else if (prefix.isEmpty) clazz.isTopLevel && !clazz.bytecodeName.contains("$$")
+        else prefix.exists(_.innerClasses contains clazz.bytecodeName)
       }
       clazz.isPublic && isReachable
     }
 
-    accessibleClassesUnder(Set.empty)
+    accessibleClassesUnder(Set.empty, Set.empty)
   }
 
   /** All implementation classes of traits (classes that end in "$" followed by "class"). */
diff --git a/reporter/functional-tests/src/test/class-removing-inner-object-nok/problems.txt b/reporter/functional-tests/src/test/class-removing-inner-object-nok/problems.txt
new file mode 100644
index 00000000..57dea9bc
--- /dev/null
+++ b/reporter/functional-tests/src/test/class-removing-inner-object-nok/problems.txt
@@ -0,0 +1,2 @@
+object A#B does not have a correspondent in new version
+method B()A#B# in class A does not have a correspondent in new version
\ No newline at end of file
diff --git a/reporter/functional-tests/src/test/class-removing-inner-object-nok/v1/A.scala b/reporter/functional-tests/src/test/class-removing-inner-object-nok/v1/A.scala
new file mode 100644
index 00000000..6e207331
--- /dev/null
+++ b/reporter/functional-tests/src/test/class-removing-inner-object-nok/v1/A.scala
@@ -0,0 +1,5 @@
+class A {
+  object B {
+    def foo: Int = 2
+  }
+}
diff --git a/reporter/functional-tests/src/test/class-removing-inner-object-nok/v2/A.scala b/reporter/functional-tests/src/test/class-removing-inner-object-nok/v2/A.scala
new file mode 100644
index 00000000..2e2439c3
--- /dev/null
+++ b/reporter/functional-tests/src/test/class-removing-inner-object-nok/v2/A.scala
@@ -0,0 +1,2 @@
+class A {
+}
diff --git a/reporter/functional-tests/src/test/object-removing-inner-object-nok/problems.txt b/reporter/functional-tests/src/test/object-removing-inner-object-nok/problems.txt
new file mode 100644
index 00000000..f32b7751
--- /dev/null
+++ b/reporter/functional-tests/src/test/object-removing-inner-object-nok/problems.txt
@@ -0,0 +1,2 @@
+object A#B does not have a correspondent in new version
+object A#B#C does not have a correspondent in new version
diff --git a/reporter/functional-tests/src/test/object-removing-inner-object-nok/v1/A.scala b/reporter/functional-tests/src/test/object-removing-inner-object-nok/v1/A.scala
new file mode 100644
index 00000000..1d74855d
--- /dev/null
+++ b/reporter/functional-tests/src/test/object-removing-inner-object-nok/v1/A.scala
@@ -0,0 +1,6 @@
+object A {
+  object B {
+    def foo: Int = 2
+    object C
+  }
+}
diff --git a/reporter/functional-tests/src/test/object-removing-inner-object-nok/v2/A.scala b/reporter/functional-tests/src/test/object-removing-inner-object-nok/v2/A.scala
new file mode 100644
index 00000000..169ef293
--- /dev/null
+++ b/reporter/functional-tests/src/test/object-removing-inner-object-nok/v2/A.scala
@@ -0,0 +1,2 @@
+object A {
+}