diff --git a/compiler/fir/fir2ir/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java b/compiler/fir/fir2ir/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
index 920a680ab2f..3847803ec6a 100644
--- a/compiler/fir/fir2ir/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
+++ b/compiler/fir/fir2ir/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
@@ -4358,6 +4358,11 @@ public class FirBlackBoxCodegenTestGenerated extends AbstractFirBlackBoxCodegenT
             runTest("compiler/testData/codegen/box/closures/localFunctionInFunction.kt");
         }
 
+        @TestMetadata("localFunctionInInitBlock.kt")
+        public void testLocalFunctionInInitBlock() throws Exception {
+            runTest("compiler/testData/codegen/box/closures/localFunctionInInitBlock.kt");
+        }
+
         @TestMetadata("localFunctionInInitializer.kt")
         public void testLocalFunctionInInitializer() throws Exception {
             runTest("compiler/testData/codegen/box/closures/localFunctionInInitializer.kt");
diff --git a/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/LocalDeclarationsLowering.kt b/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/LocalDeclarationsLowering.kt
index 645acb119ce..a325c088897 100644
--- a/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/LocalDeclarationsLowering.kt
+++ b/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/LocalDeclarationsLowering.kt
@@ -570,12 +570,18 @@ class LocalDeclarationsLowering(
         private fun generateNameForLiftedDeclaration(
             declaration: IrDeclaration,
             newOwner: IrDeclarationParent
-        ): Name =
-            Name.identifier(
-                declaration.parentsWithSelf
-                    .takeWhile { it != newOwner }
-                    .toList().reversed().joinToString(separator = "$") { suggestLocalName(it as IrDeclarationWithName) }
-            )
+        ): Name {
+            val parents = declaration.parentsWithSelf.takeWhile { it != newOwner }.toList().reversed()
+            val nameFromParents = parents.joinToString(separator = "$") { suggestLocalName(it as IrDeclarationWithName) }
+            // Local functions declared in anonymous initializers have classes as their parents.
+            // Such anonymous initializers, however, are inlined into the constructors delegating to super class constructor.
+            // There can be local functions declared in local function in init blocks (and further),
+            // but such functions would have proper "safe" names (outerLocalFun1$outerLocalFun2$...$localFun).
+            return if (parents.size == 1 && declaration.parent is IrClass)
+                Name.identifier("_init_\$$nameFromParents")
+            else
+                Name.identifier(nameFromParents)
+        }
 
         private fun createLiftedDeclaration(localFunctionContext: LocalFunctionContext) {
             val oldDeclaration = localFunctionContext.declaration
diff --git a/compiler/testData/codegen/box/closures/localFunctionInInitBlock.kt b/compiler/testData/codegen/box/closures/localFunctionInInitBlock.kt
new file mode 100644
index 00000000000..236932f6625
--- /dev/null
+++ b/compiler/testData/codegen/box/closures/localFunctionInInitBlock.kt
@@ -0,0 +1,28 @@
+// IGNORE_BACKEND_FIR: JVM_IR
+
+lateinit var result1: String
+lateinit var result2: String
+
+class Test(val x: String) {
+    fun test(a: String) {
+        if (result1 != a) throw AssertionError("result1: $result1")
+        result2 = a
+    }
+
+    init {
+        fun test() {
+            fun test1() {
+                result1 = x
+            }
+            test1()
+        }
+        test()
+    }
+}
+
+fun box(): String {
+    val t = Test("OK")
+    t.test("OK")
+
+    return result2
+}
\ No newline at end of file
diff --git a/compiler/testData/codegen/bytecodeListing/localFunctionInInitBlock.kt b/compiler/testData/codegen/bytecodeListing/localFunctionInInitBlock.kt
new file mode 100644
index 00000000000..18ed2a6a750
--- /dev/null
+++ b/compiler/testData/codegen/bytecodeListing/localFunctionInInitBlock.kt
@@ -0,0 +1,23 @@
+class C() {
+    constructor(x: Int): this() {
+        fun test() {
+            fun test() {}
+        }
+    }
+
+    constructor(y: String): this() {
+        fun test() {
+            fun test() {}
+        }
+    }
+
+    fun test() {
+        fun test() {}
+    }
+
+    init {
+        fun test() {
+            fun test() {}
+        }
+    }
+}
\ No newline at end of file
diff --git a/compiler/testData/codegen/bytecodeListing/localFunctionInInitBlock.txt b/compiler/testData/codegen/bytecodeListing/localFunctionInInitBlock.txt
new file mode 100644
index 00000000000..d6d15ab6710
--- /dev/null
+++ b/compiler/testData/codegen/bytecodeListing/localFunctionInInitBlock.txt
@@ -0,0 +1,87 @@
+@kotlin.Metadata
+final class C$1$1 {
+    public final static field INSTANCE: C$1$1
+    inner (anonymous) class C$1
+    inner (anonymous) class C$1$1
+    static method <clinit>(): void
+    method <init>(): void
+    public synthetic bridge method invoke(): java.lang.Object
+    public final method invoke(): void
+}
+
+@kotlin.Metadata
+final class C$1 {
+    public final static field INSTANCE: C$1
+    inner (anonymous) class C$1
+    inner (anonymous) class C$1$1
+    static method <clinit>(): void
+    method <init>(): void
+    public synthetic bridge method invoke(): java.lang.Object
+    public final method invoke(): void
+}
+
+@kotlin.Metadata
+final class C$2$1 {
+    public final static field INSTANCE: C$2$1
+    inner (anonymous) class C$2
+    inner (anonymous) class C$2$1
+    static method <clinit>(): void
+    method <init>(): void
+    public synthetic bridge method invoke(): java.lang.Object
+    public final method invoke(): void
+}
+
+@kotlin.Metadata
+final class C$2 {
+    public final static field INSTANCE: C$2
+    inner (anonymous) class C$2
+    inner (anonymous) class C$2$1
+    static method <clinit>(): void
+    method <init>(): void
+    public synthetic bridge method invoke(): java.lang.Object
+    public final method invoke(): void
+}
+
+@kotlin.Metadata
+final class C$3$1 {
+    public final static field INSTANCE: C$3$1
+    inner (anonymous) class C$3
+    inner (anonymous) class C$3$1
+    static method <clinit>(): void
+    method <init>(): void
+    public synthetic bridge method invoke(): java.lang.Object
+    public final method invoke(): void
+}
+
+@kotlin.Metadata
+final class C$3 {
+    public final static field INSTANCE: C$3
+    inner (anonymous) class C$3
+    inner (anonymous) class C$3$1
+    static method <clinit>(): void
+    method <init>(): void
+    public synthetic bridge method invoke(): java.lang.Object
+    public final method invoke(): void
+}
+
+@kotlin.Metadata
+final class C$test$1 {
+    public final static field INSTANCE: C$test$1
+    inner (anonymous) class C$test$1
+    static method <clinit>(): void
+    method <init>(): void
+    public synthetic bridge method invoke(): java.lang.Object
+    public final method invoke(): void
+}
+
+@kotlin.Metadata
+public final class C {
+    inner (anonymous) class C$1
+    inner (anonymous) class C$2
+    inner (anonymous) class C$3
+    inner (anonymous) class C$test$1
+    public method <init>(): void
+    public method <init>(@org.jetbrains.annotations.NotNull p0: java.lang.String): void
+    public method <init>(p0: int): void
+    public final method test(): void
+}
diff --git a/compiler/testData/codegen/bytecodeListing/localFunctionInInitBlock_ir.txt b/compiler/testData/codegen/bytecodeListing/localFunctionInInitBlock_ir.txt
new file mode 100644
index 00000000000..04652eed297
--- /dev/null
+++ b/compiler/testData/codegen/bytecodeListing/localFunctionInInitBlock_ir.txt
@@ -0,0 +1,14 @@
+@kotlin.Metadata
+public final class C {
+    public method <init>(): void
+    public method <init>(@org.jetbrains.annotations.NotNull p0: java.lang.String): void
+    public method <init>(p0: int): void
+    private final static method _init_$test-0$test(): void
+    private final static method _init_$test-0(): void
+    private final static method _init_$test-2$test-1(): void
+    private final static method _init_$test-2(): void
+    private final static method _init_$test-5(): void
+    private final static method test$test-3(): void
+    public final method test(): void
+    private final static method test-5$test-4(): void
+}
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
index c715000b72c..37e07672a7d 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
@@ -4378,6 +4378,11 @@ public class BlackBoxCodegenTestGenerated extends AbstractBlackBoxCodegenTest {
             runTest("compiler/testData/codegen/box/closures/localFunctionInFunction.kt");
         }
 
+        @TestMetadata("localFunctionInInitBlock.kt")
+        public void testLocalFunctionInInitBlock() throws Exception {
+            runTest("compiler/testData/codegen/box/closures/localFunctionInInitBlock.kt");
+        }
+
         @TestMetadata("localFunctionInInitializer.kt")
         public void testLocalFunctionInInitializer() throws Exception {
             runTest("compiler/testData/codegen/box/closures/localFunctionInInitializer.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/BytecodeListingTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/BytecodeListingTestGenerated.java
index ceb4fa0f839..4675180bf19 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/BytecodeListingTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/BytecodeListingTestGenerated.java
@@ -99,6 +99,11 @@ public class BytecodeListingTestGenerated extends AbstractBytecodeListingTest {
         runTest("compiler/testData/codegen/bytecodeListing/lateInitNotNull.kt");
     }
 
+    @TestMetadata("localFunctionInInitBlock.kt")
+    public void testLocalFunctionInInitBlock() throws Exception {
+        runTest("compiler/testData/codegen/bytecodeListing/localFunctionInInitBlock.kt");
+    }
+
     @TestMetadata("noCollectionStubMethodsInInterface.kt")
     public void testNoCollectionStubMethodsInInterface() throws Exception {
         runTest("compiler/testData/codegen/bytecodeListing/noCollectionStubMethodsInInterface.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
index 535eb66a749..bb2b2a184b2 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
@@ -4378,6 +4378,11 @@ public class LightAnalysisModeTestGenerated extends AbstractLightAnalysisModeTes
             runTest("compiler/testData/codegen/box/closures/localFunctionInFunction.kt");
         }
 
+        @TestMetadata("localFunctionInInitBlock.kt")
+        public void testLocalFunctionInInitBlock() throws Exception {
+            runTest("compiler/testData/codegen/box/closures/localFunctionInInitBlock.kt");
+        }
+
         @TestMetadata("localFunctionInInitializer.kt")
         public void testLocalFunctionInInitializer() throws Exception {
             runTest("compiler/testData/codegen/box/closures/localFunctionInInitializer.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
index 0078395e61a..6cade59e648 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
@@ -4358,6 +4358,11 @@ public class IrBlackBoxCodegenTestGenerated extends AbstractIrBlackBoxCodegenTes
             runTest("compiler/testData/codegen/box/closures/localFunctionInFunction.kt");
         }
 
+        @TestMetadata("localFunctionInInitBlock.kt")
+        public void testLocalFunctionInInitBlock() throws Exception {
+            runTest("compiler/testData/codegen/box/closures/localFunctionInInitBlock.kt");
+        }
+
         @TestMetadata("localFunctionInInitializer.kt")
         public void testLocalFunctionInInitializer() throws Exception {
             runTest("compiler/testData/codegen/box/closures/localFunctionInInitializer.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBytecodeListingTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBytecodeListingTestGenerated.java
index 3b58390a514..64c33c833c7 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBytecodeListingTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBytecodeListingTestGenerated.java
@@ -99,6 +99,11 @@ public class IrBytecodeListingTestGenerated extends AbstractIrBytecodeListingTes
         runTest("compiler/testData/codegen/bytecodeListing/lateInitNotNull.kt");
     }
 
+    @TestMetadata("localFunctionInInitBlock.kt")
+    public void testLocalFunctionInInitBlock() throws Exception {
+        runTest("compiler/testData/codegen/bytecodeListing/localFunctionInInitBlock.kt");
+    }
+
     @TestMetadata("noCollectionStubMethodsInInterface.kt")
     public void testNoCollectionStubMethodsInInterface() throws Exception {
         runTest("compiler/testData/codegen/bytecodeListing/noCollectionStubMethodsInInterface.kt");
diff --git a/js/js.tests/test/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java b/js/js.tests/test/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java
index 53ed9829264..ba8da39592c 100644
--- a/js/js.tests/test/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java
+++ b/js/js.tests/test/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java
@@ -3608,6 +3608,11 @@ public class IrJsCodegenBoxES6TestGenerated extends AbstractIrJsCodegenBoxES6Tes
             runTest("compiler/testData/codegen/box/closures/localFunctionInFunction.kt");
         }
 
+        @TestMetadata("localFunctionInInitBlock.kt")
+        public void testLocalFunctionInInitBlock() throws Exception {
+            runTest("compiler/testData/codegen/box/closures/localFunctionInInitBlock.kt");
+        }
+
         @TestMetadata("localFunctionInInitializer.kt")
         public void testLocalFunctionInInitializer() throws Exception {
             runTest("compiler/testData/codegen/box/closures/localFunctionInInitializer.kt");
diff --git a/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java b/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
index 8088b77cb41..004d0bccc91 100644
--- a/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
+++ b/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
@@ -3608,6 +3608,11 @@ public class IrJsCodegenBoxTestGenerated extends AbstractIrJsCodegenBoxTest {
             runTest("compiler/testData/codegen/box/closures/localFunctionInFunction.kt");
         }
 
+        @TestMetadata("localFunctionInInitBlock.kt")
+        public void testLocalFunctionInInitBlock() throws Exception {
+            runTest("compiler/testData/codegen/box/closures/localFunctionInInitBlock.kt");
+        }
+
         @TestMetadata("localFunctionInInitializer.kt")
         public void testLocalFunctionInInitializer() throws Exception {
             runTest("compiler/testData/codegen/box/closures/localFunctionInInitializer.kt");
diff --git a/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java b/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
index d9a44fcdfbd..ba8b105ef31 100644
--- a/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
+++ b/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
@@ -3608,6 +3608,11 @@ public class JsCodegenBoxTestGenerated extends AbstractJsCodegenBoxTest {
             runTest("compiler/testData/codegen/box/closures/localFunctionInFunction.kt");
         }
 
+        @TestMetadata("localFunctionInInitBlock.kt")
+        public void testLocalFunctionInInitBlock() throws Exception {
+            runTest("compiler/testData/codegen/box/closures/localFunctionInInitBlock.kt");
+        }
+
         @TestMetadata("localFunctionInInitializer.kt")
         public void testLocalFunctionInInitializer() throws Exception {
             runTest("compiler/testData/codegen/box/closures/localFunctionInInitializer.kt");