diff --git a/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/JvmLower.kt b/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/JvmLower.kt
index 8c9224fac46..cafe0c14140 100644
--- a/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/JvmLower.kt
+++ b/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/JvmLower.kt
@@ -394,7 +394,7 @@ val jvmPhases = NamedCompilerPhase(
             generateMultifileFacadesPhase then
             resolveInlineCallsPhase then
             // should be last transformation
-            removeDeclarationsThatWouldBeInlined then
+            prepareForBytecodeInlining then
             validateIrAfterLowering
 )
 
diff --git a/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/codegen/IrSourceCompilerForInline.kt b/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/codegen/IrSourceCompilerForInline.kt
index 14104b2fe10..70f4b80a811 100644
--- a/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/codegen/IrSourceCompilerForInline.kt
+++ b/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/codegen/IrSourceCompilerForInline.kt
@@ -167,5 +167,4 @@ private tailrec fun IrDeclaration.isInlineOrInsideInline(): Boolean {
     return parent.isInlineOrInsideInline()
 }
 
-// TODO generate better labels; this is unique (includes the object's address), but not very descriptive
-internal fun IrLoop.nonLocalReturnLabel(forBreak: Boolean): String = "$this\$${if (forBreak) "break" else "continue"}"
+internal fun IrLoop.nonLocalReturnLabel(forBreak: Boolean): String = "${label!!}\$${if (forBreak) "break" else "continue"}"
diff --git a/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/lower/BytecodeInliningPreparationLowering.kt b/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/lower/BytecodeInliningPreparationLowering.kt
new file mode 100644
index 00000000000..5f023370765
--- /dev/null
+++ b/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/lower/BytecodeInliningPreparationLowering.kt
@@ -0,0 +1,56 @@
+/*
+ * Copyright 2010-2019 JetBrains s.r.o. and Kotlin Programming Language contributors.
+ * Use of this source code is governed by the Apache 2.0 license that can be found in the license/LICENSE.txt file.
+ */
+
+package org.jetbrains.kotlin.backend.jvm.lower
+
+import org.jetbrains.kotlin.backend.common.FileLoweringPass
+import org.jetbrains.kotlin.backend.common.phaser.makeIrModulePhase
+import org.jetbrains.kotlin.backend.jvm.JvmBackendContext
+import org.jetbrains.kotlin.backend.jvm.codegen.isInlineIrExpression
+import org.jetbrains.kotlin.ir.IrElement
+import org.jetbrains.kotlin.ir.declarations.*
+import org.jetbrains.kotlin.ir.expressions.IrFunctionReference
+import org.jetbrains.kotlin.ir.expressions.IrLoop
+import org.jetbrains.kotlin.ir.util.parentAsClass
+import org.jetbrains.kotlin.ir.visitors.IrElementVisitor
+
+internal val prepareForBytecodeInlining = makeIrModulePhase(
+    ::BytecodeInliningPreparationLowering,
+    name = "BytecodeInliningPreparation",
+    description = "Remove inline lambda declarations and label all loops"
+)
+
+private class BytecodeInliningPreparationLowering(val context: JvmBackendContext) : FileLoweringPass {
+    override fun lower(irFile: IrFile) {
+        val loweredLambdasToDelete = mutableSetOf<IrFunction>()
+        irFile.accept(object : IrElementVisitor<Unit, String> {
+            // This counter is intentionally not local to every declaration because their names might clash.
+            private var counter = 0
+
+            override fun visitElement(element: IrElement, data: String) =
+                element.acceptChildren(this, if (element is IrDeclarationWithName) "$data${element.name}$" else data)
+
+            override fun visitLoop(loop: IrLoop, data: String) {
+                // Give all loops unique labels so that we can generate unambiguous instructions for non-local
+                // `break`/`continue` statements.
+                loop.label = "$data${++counter}"
+                super.visitLoop(loop, data)
+            }
+
+            override fun visitFunctionReference(expression: IrFunctionReference, data: String) {
+                // Remove inline lambdas from their declaration parents. They should not appear in the output
+                // bytecode in non-inlined form.
+                if (expression.origin.isInlineIrExpression()) {
+                    loweredLambdasToDelete.add(expression.symbol.owner)
+                }
+                super.visitFunctionReference(expression, data)
+            }
+        }, "")
+
+        for (irClass in loweredLambdasToDelete.mapTo(mutableSetOf()) { it.parentAsClass }) {
+            irClass.declarations.removeAll(loweredLambdasToDelete)
+        }
+    }
+}
diff --git a/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/lower/RemoveDeclarationsThatWouldBeInlinedLowering.kt b/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/lower/RemoveDeclarationsThatWouldBeInlinedLowering.kt
deleted file mode 100644
index c3637e0a17f..00000000000
--- a/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/lower/RemoveDeclarationsThatWouldBeInlinedLowering.kt
+++ /dev/null
@@ -1,55 +0,0 @@
-/*
- * Copyright 2010-2019 JetBrains s.r.o. and Kotlin Programming Language contributors.
- * Use of this source code is governed by the Apache 2.0 license that can be found in the license/LICENSE.txt file.
- */
-
-package org.jetbrains.kotlin.backend.jvm.lower
-
-import org.jetbrains.kotlin.backend.common.FileLoweringPass
-import org.jetbrains.kotlin.backend.common.phaser.makeIrModulePhase
-import org.jetbrains.kotlin.backend.jvm.JvmBackendContext
-import org.jetbrains.kotlin.backend.jvm.codegen.isInlineIrExpression
-import org.jetbrains.kotlin.ir.IrElement
-import org.jetbrains.kotlin.ir.IrStatement
-import org.jetbrains.kotlin.ir.declarations.IrClass
-import org.jetbrains.kotlin.ir.declarations.IrFile
-import org.jetbrains.kotlin.ir.declarations.IrFunction
-import org.jetbrains.kotlin.ir.expressions.IrFunctionReference
-import org.jetbrains.kotlin.ir.visitors.*
-
-internal val removeDeclarationsThatWouldBeInlined = makeIrModulePhase(
-    ::RemoveDeclarationsThatWouldBeInlinedLowering,
-    name = "RemoveInlinedDeclarations",
-    description = "Rename declaration that should be inlined"
-)
-
-// Removes all functions which are only used as arguments to inline functions. It's
-// important that this phase runs right before codegen, since we need the bodies of lambdas to
-// be lowered for inline codegen. Conversely, since this phase runs right before codegen we can
-// assume that all remaining function references are only used as arguments to inline functions -
-// otherwise they would have been lowered.
-private class RemoveDeclarationsThatWouldBeInlinedLowering(val context: JvmBackendContext) : FileLoweringPass {
-    override fun lower(irFile: IrFile) {
-        val loweredLambdasToDelete = mutableSetOf<IrFunction>()
-
-        irFile.acceptVoid(object : IrElementVisitorVoid {
-            override fun visitElement(element: IrElement) = element.acceptChildrenVoid(this)
-
-            override fun visitFunctionReference(expression: IrFunctionReference) {
-                if (expression.origin.isInlineIrExpression()) {
-                    loweredLambdasToDelete.add(expression.symbol.owner)
-                }
-
-                expression.acceptChildrenVoid(this)
-            }
-        })
-
-        irFile.transformChildrenVoid(object : IrElementTransformerVoid() {
-            override fun visitClass(declaration: IrClass): IrStatement {
-                return super.visitClass(declaration).also {
-                    declaration.declarations.removeAll(loweredLambdasToDelete)
-                }
-            }
-        })
-    }
-}