diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/types/JetTypeInferrer.java b/compiler/frontend/src/org/jetbrains/jet/lang/types/JetTypeInferrer.java
index 6ccd009a9f2..a60c73ab053 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/types/JetTypeInferrer.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/types/JetTypeInferrer.java
@@ -884,7 +884,9 @@ public class JetTypeInferrer {
                 }
             }
             JetType[] result = new JetType[1];
-            if (furtherNameLookup(expression, referencedName, result, context)) {
+            TemporaryBindingTrace temporaryTrace = TemporaryBindingTrace.create(context.trace);
+            if (furtherNameLookup(expression, referencedName, result, context.replaceBindingTrace(temporaryTrace))) {
+                temporaryTrace.commit();
                 return context.services.checkType(result[0], expression, context);
             }
             // To report NO_CLASS_OBJECT when no namespace found
@@ -893,7 +895,8 @@ public class JetTypeInferrer {
                 context.trace.record(REFERENCE_TARGET, expression, classifier);
                 return ErrorUtils.createErrorType("No class object in " + expression.getReferencedName());
             }
-            return null;
+            temporaryTrace.commit();
+            return result[0];
         }
 
         public boolean isNamespacePosition() {
@@ -905,7 +908,7 @@ public class JetTypeInferrer {
             if (namespaceType != null) {
 //                context.trace.getErrorHandler().genericError(expression.getNode(), "Expression expected, but a namespace name found");
                 context.trace.report(EXPRESSION_EXPECTED_NAMESPACE_FOUND.on(expression));
-                return true;
+                result[0] = ErrorUtils.createErrorType("Type for " + referencedName);
             }
             return false;
         }
diff --git a/idea/testData/checkerWithErrorTypes/quick/NamespaceInExpressionPosition.jet b/idea/testData/checkerWithErrorTypes/quick/NamespaceInExpressionPosition.jet
new file mode 100644
index 00000000000..863f25630cc
--- /dev/null
+++ b/idea/testData/checkerWithErrorTypes/quick/NamespaceInExpressionPosition.jet
@@ -0,0 +1,11 @@
+namespace foo
+
+class X {}
+
+val s = <!EXPRESSION_EXPECTED_NAMESPACE_FOUND!>java<!>
+val ss = <!NO_CLASS_OBJECT!>System<!>
+val sss = <!NO_CLASS_OBJECT!>X<!>
+val xs = java.<!EXPRESSION_EXPECTED_NAMESPACE_FOUND!>lang<!>
+val xss = java.lang.<!NO_CLASS_OBJECT!>System<!>
+val xsss = foo.<!NO_CLASS_OBJECT!>X<!>
+val xssss = <!EXPRESSION_EXPECTED_NAMESPACE_FOUND!>foo<!>