diff --git a/gcc/fortran/ChangeLog b/gcc/fortran/ChangeLog
index 69168e58455..ca4a80d83e9 100644
--- a/gcc/fortran/ChangeLog
+++ b/gcc/fortran/ChangeLog
@@ -1,3 +1,9 @@
+2005-09-18  Paul Thomas  <pault@gcc.gnu.org>
+
+	PR fortran/16861
+	* module.c (read_module): Give symbols from module procedures
+	different true_name entries to those from the module proper.
+
 2005-09-17  Francois-Xavier Coudert  <coudert@clipper.ens.fr>
 
 	PR fortran/15586
diff --git a/gcc/fortran/module.c b/gcc/fortran/module.c
index 511705084b7..8f225aa8d9d 100644
--- a/gcc/fortran/module.c
+++ b/gcc/fortran/module.c
@@ -3099,7 +3099,7 @@ read_module (void)
   const char *p;
   char name[GFC_MAX_SYMBOL_LEN + 1];
   gfc_intrinsic_op i;
-  int ambiguous, symbol, j, nuse;
+  int ambiguous, j, nuse, series, symbol;
   pointer_info *info;
   gfc_use_rename *u;
   gfc_symtree *st;
@@ -3142,6 +3142,14 @@ read_module (void)
          being loaded again.  */
 
       sym = find_true_name (info->u.rsym.true_name, info->u.rsym.module);
+
+      /* If a module contains subroutines with assumed shape dummy
+       arguments, the symbols for indices need to be different from
+       from those in the module proper(ns = 1).  */
+      if (sym !=NULL && info->u.rsym.ns != 1)
+	sym = find_true_name (info->u.rsym.true_name,
+		gfc_get_string ("%s@%d",module_name, series++));
+
       if (sym == NULL)
 	continue;
 
@@ -3485,11 +3493,6 @@ write_symbol1 (pointer_info * p)
   if (p->type != P_SYMBOL || p->u.wsym.state != NEEDS_WRITE)
     return 0;
 
-  /* FIXME: This shouldn't be necessary, but it works around
-     deficiencies in the module loader or/and symbol handling.  */
-  if (p->u.wsym.sym->module == NULL && p->u.wsym.sym->attr.dummy)
-    p->u.wsym.sym->module = gfc_get_string (module_name);
-
   p->u.wsym.state = WRITTEN;
   write_symbol (p->integer, p->u.wsym.sym);
 
diff --git a/gcc/testsuite/ChangeLog b/gcc/testsuite/ChangeLog
index b69d38eb94b..c60cb5587aa 100644
--- a/gcc/testsuite/ChangeLog
+++ b/gcc/testsuite/ChangeLog
@@ -1,3 +1,8 @@
+2005-09-18  Paul Thomas  <pault@gcc.gnu.org>
+
+	PR fortran/16861
+	* gfortran.dg/nested_modules_2.f90: New test.
+
 2005-09-17  Volker Reichelt  <reichelt@igpm.rwth-aachen.de>
 
 	PR c++/18368
diff --git a/gcc/testsuite/gfortran.dg/nested_modules_2.f90 b/gcc/testsuite/gfortran.dg/nested_modules_2.f90
new file mode 100644
index 00000000000..91ab766c1be
--- /dev/null
+++ b/gcc/testsuite/gfortran.dg/nested_modules_2.f90
@@ -0,0 +1,38 @@
+! { dg do-run }
+! This tests the patch for PR16861.
+!
+! Contributed by Paul Thomas <pault@gcc.gnu.org>
+!
+module foo
+INTEGER :: i
+end module foo
+
+module bar
+contains
+subroutine sub1 (j)
+  use foo
+  integer, dimension(i) :: j
+  j = 42
+end subroutine sub1
+subroutine sub2 (k)
+  use foo
+  integer, dimension(i) :: k
+  k = 84
+end subroutine sub2
+end module bar
+
+module foobar
+  use foo                      !This used to cause an ICE
+  use bar
+end module foobar
+
+program testfoobar
+  use foobar
+  integer, dimension(3)  :: l = 0
+  i = 2
+  call sub1 (l)
+  i = 1
+  call sub2 (l)
+  if (all (l.ne.(/84,42,0/))) call abort ()
+end program testfoobar
+