diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorResolver.java b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorResolver.java
index ff231209d09..ace7885a16f 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorResolver.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorResolver.java
@@ -1470,14 +1470,31 @@ public class DescriptorResolver {
             @NotNull BindingTrace trace,
             @NotNull PsiElement reportErrorsOn,
             @NotNull ClassDescriptor target
+    ) {
+        return checkHasOuterClassInstance(scope, trace, reportErrorsOn, target, true);
+    }
+
+    public static boolean checkHasOuterClassInstance(
+            @NotNull JetScope scope,
+            @NotNull BindingTrace trace,
+            @NotNull PsiElement reportErrorsOn,
+            @NotNull ClassDescriptor target,
+            boolean doSuperClassCheck
     ) {
         DeclarationDescriptor descriptor = getContainingClass(scope);
+
         while (descriptor != null) {
             if (descriptor instanceof ClassDescriptor) {
                 ClassDescriptor classDescriptor = (ClassDescriptor) descriptor;
-                if (isSubclass(classDescriptor, target)) {
+
+                if (classDescriptor == target) {
                     return true;
                 }
+
+                if (doSuperClassCheck && isSubclass(classDescriptor, target)) {
+                    return true;
+                }
+
                 if (isStaticNestedClass(classDescriptor)) {
                     trace.report(INACCESSIBLE_OUTER_CLASS_EXPRESSION.on(reportErrorsOn, classDescriptor));
                     return false;
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/TypeResolver.java b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/TypeResolver.java
index 8c2e1ae7c59..bf001ecf9bd 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/TypeResolver.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/TypeResolver.java
@@ -123,7 +123,8 @@ public class TypeResolver {
 
                         DeclarationDescriptor containing = typeParameterDescriptor.getContainingDeclaration();
                         if (containing instanceof ClassDescriptor) {
-                            DescriptorResolver.checkHasOuterClassInstance(scope, trace, referenceExpression, (ClassDescriptor) containing);
+                            // Type parameter can't be inherited from member of parent class, so we can skip subclass check
+                            DescriptorResolver.checkHasOuterClassInstance(scope, trace, referenceExpression, (ClassDescriptor) containing, false);
                         }
                     }
                     else if (classifierDescriptor instanceof ClassDescriptor) {
diff --git a/compiler/testData/diagnostics/tests/inner/deepInnerClass.kt b/compiler/testData/diagnostics/tests/inner/deepInnerClass.kt
new file mode 100644
index 00000000000..2ce0546c66b
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inner/deepInnerClass.kt
@@ -0,0 +1,14 @@
+trait P<U, Y>
+
+class A<T> {
+    class B {
+        fun test() {
+            class C<W>() : P<W, <!INACCESSIBLE_OUTER_CLASS_EXPRESSION!>T<!>> {
+                class object : P<<!INACCESSIBLE_OUTER_CLASS_EXPRESSION!>W<!>, <!INACCESSIBLE_OUTER_CLASS_EXPRESSION!>T<!>> {
+                }
+
+                inner class D : P<W, <!INACCESSIBLE_OUTER_CLASS_EXPRESSION!>T<!>>
+            }
+        }
+    }
+}
diff --git a/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
index c32e00daae0..6da64048a60 100644
--- a/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
@@ -3017,6 +3017,11 @@ public class JetDiagnosticsTestGenerated extends AbstractDiagnosticsTestWithEage
                 doTest("compiler/testData/diagnostics/tests/inner/constructorAccess.kt");
             }
             
+            @TestMetadata("deepInnerClass.kt")
+            public void testDeepInnerClass() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/inner/deepInnerClass.kt");
+            }
+            
             @TestMetadata("enumEntries.kt")
             public void testEnumEntries() throws Exception {
                 doTest("compiler/testData/diagnostics/tests/inner/enumEntries.kt");