diff --git a/compiler/frontend/src/org/jetbrains/kotlin/diagnostics/Errors.java b/compiler/frontend/src/org/jetbrains/kotlin/diagnostics/Errors.java
index 0e2c7e78112..d16a49935a1 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/diagnostics/Errors.java
+++ b/compiler/frontend/src/org/jetbrains/kotlin/diagnostics/Errors.java
@@ -143,7 +143,7 @@ public interface Errors {
     DiagnosticFactory0<JetAnnotationEntry> DEPRECATED_UNESCAPED_ANNOTATION = DiagnosticFactory0.create(WARNING);
     DiagnosticFactory0<PsiElement> DEPRECATED_ESCAPED_MODIFIER = DiagnosticFactory0.create(WARNING);
     DiagnosticFactory1<JetAnnotationEntry, String> DEPRECATED_ANNOTATION_THAT_BECOMES_MODIFIER = DiagnosticFactory1.create(WARNING);
-
+    DiagnosticFactory0<JetAnnotationEntry> DEPRECATED_ANNOTATION_USE = DiagnosticFactory0.create(WARNING);
 
     // Classes and traits
 
diff --git a/compiler/frontend/src/org/jetbrains/kotlin/diagnostics/rendering/DefaultErrorMessages.java b/compiler/frontend/src/org/jetbrains/kotlin/diagnostics/rendering/DefaultErrorMessages.java
index 6470453f508..81062d76eec 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/diagnostics/rendering/DefaultErrorMessages.java
+++ b/compiler/frontend/src/org/jetbrains/kotlin/diagnostics/rendering/DefaultErrorMessages.java
@@ -134,7 +134,8 @@ public class DefaultErrorMessages {
 
         MAP.put(DEPRECATED_UNESCAPED_ANNOTATION, "Annotations without '@' are deprecated now");
         MAP.put(DEPRECATED_ESCAPED_MODIFIER, "Modifiers with '@' are deprecated now");
-        MAP.put(DEPRECATED_ANNOTATION_THAT_BECOMES_MODIFIER, "Annotation ''{0}'' will become a modifier soon. Do not use ''@'' before it", STRING);
+        MAP.put(DEPRECATED_ANNOTATION_THAT_BECOMES_MODIFIER, "This annotation will become a modifier soon. Use ''{0}'' modifier instead", STRING);
+        MAP.put(DEPRECATED_ANNOTATION_USE, "This annotation use is deprecated");
 
         MAP.put(REDUNDANT_MODIFIER, "Modifier ''{0}'' is redundant because ''{1}'' is present", TO_STRING, TO_STRING);
         MAP.put(ABSTRACT_MODIFIER_IN_TRAIT, "Modifier ''abstract'' is redundant in interface");
diff --git a/compiler/frontend/src/org/jetbrains/kotlin/resolve/AnnotationChecker.kt b/compiler/frontend/src/org/jetbrains/kotlin/resolve/AnnotationChecker.kt
index ddfda380caa..4a2f879ded7 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/resolve/AnnotationChecker.kt
+++ b/compiler/frontend/src/org/jetbrains/kotlin/resolve/AnnotationChecker.kt
@@ -71,7 +71,12 @@ public class AnnotationChecker(private val additionalCheckers: Iterable<Addition
             val classDescriptor = TypeUtils.getClassDescriptor(descriptor.type) ?: continue
 
             if (classDescriptor.fqNameSafe in ANNOTATIONS_SHOULD_BE_REPLACED_WITH_MODIFIERS_FQ_NAMES) {
-                trace.report(Errors.DEPRECATED_ANNOTATION_THAT_BECOMES_MODIFIER.on(entry, ANNOTATION_MODIFIERS_MAP[classDescriptor.fqNameSafe]!!))
+                if (descriptor.isInlineOptionsWithLocalBreaks()) {
+                    trace.report(Errors.DEPRECATED_ANNOTATION_USE.on(entry))
+                }
+                else {
+                    trace.report(Errors.DEPRECATED_ANNOTATION_THAT_BECOMES_MODIFIER.on(entry, ANNOTATION_MODIFIERS_MAP[classDescriptor.fqNameSafe]!!))
+                }
             }
             else {
                 if (!entry.hasAtSymbolOrInList()) {
@@ -93,6 +98,21 @@ public class AnnotationChecker(private val additionalCheckers: Iterable<Addition
         additionalCheckers.forEach { it.checkEntries(entries, actualTargets.defaultTargets, trace) }
     }
 
+    private fun AnnotationDescriptor.isInlineOptionsWithLocalBreaks(): Boolean {
+        val descriptor = type.constructor.declarationDescriptor
+        if (descriptor !is ClassDescriptor) return false
+
+        if (descriptor.fqNameSafe == KotlinBuiltIns.FQ_NAMES.inlineOptions) {
+            val vararg = (allValueArguments.values().firstOrNull() as? ArrayValue)?.value ?: return false
+            return vararg.all {
+                arg ->
+                val enumValue = (arg as? EnumValue) ?: return false
+                return enumValue.value.name.asString() == InlineOption.LOCAL_CONTINUE_AND_BREAK.name()
+            }
+        }
+        return false
+    }
+
     private fun checkAnnotationEntry(entry: JetAnnotationEntry, actualTargets: TargetList, trace: BindingTrace) {
         val applicableTargets = applicableTargetSet(entry, trace)
         val useSiteTarget = entry.useSiteTarget?.getAnnotationUseSiteTarget()
diff --git a/compiler/testData/diagnostics/tests/annotations/migration/escapedModifiers.kt b/compiler/testData/diagnostics/tests/annotations/migration/escapedModifiers.kt
index d660113525d..066253c4b27 100644
--- a/compiler/testData/diagnostics/tests/annotations/migration/escapedModifiers.kt
+++ b/compiler/testData/diagnostics/tests/annotations/migration/escapedModifiers.kt
@@ -29,3 +29,4 @@ fun bar2(): Array<Q> = null!!
 <!DEPRECATED_ANNOTATION_THAT_BECOMES_MODIFIER!>@tailRecursive<!> fun tailFun(): Int = tailFun()
 
 inline fun inlineFun(<!DEPRECATED_ANNOTATION_THAT_BECOMES_MODIFIER!>@inlineOptions(InlineOption.ONLY_LOCAL_RETURN)<!> block: () -> Int) {}
+inline fun inlineFun2(<!DEPRECATED_ANNOTATION_USE!>@inlineOptions(InlineOption.LOCAL_CONTINUE_AND_BREAK)<!> block: () -> Int) {}
diff --git a/compiler/testData/diagnostics/tests/annotations/migration/escapedModifiers.txt b/compiler/testData/diagnostics/tests/annotations/migration/escapedModifiers.txt
index 6bcd3d2e985..ca5bf0efd2e 100644
--- a/compiler/testData/diagnostics/tests/annotations/migration/escapedModifiers.txt
+++ b/compiler/testData/diagnostics/tests/annotations/migration/escapedModifiers.txt
@@ -4,6 +4,7 @@ kotlin.inline() private fun bar(/*0*/ block: () -> kotlin.Int): kotlin.Int
 public fun bar2(): kotlin.Array<Q>
 kotlin.inline() public fun baz(): kotlin.Unit
 kotlin.inline() public fun inlineFun(/*0*/ kotlin.inlineOptions(value = {InlineOption.ONLY_LOCAL_RETURN}) block: () -> kotlin.Int): kotlin.Unit
+kotlin.inline() public fun inlineFun2(/*0*/ kotlin.inlineOptions(value = {InlineOption.LOCAL_CONTINUE_AND_BREAK}) block: () -> kotlin.Int): kotlin.Unit
 kotlin.external() public fun nativeFun(): kotlin.Int
 kotlin.tailRecursive() public fun tailFun(): kotlin.Int