diff --git a/compiler/backend/src/org/jetbrains/kotlin/codegen/inline/defaultMethodUtil.kt b/compiler/backend/src/org/jetbrains/kotlin/codegen/inline/defaultMethodUtil.kt
index e4653049b18..f83e2d48305 100644
--- a/compiler/backend/src/org/jetbrains/kotlin/codegen/inline/defaultMethodUtil.kt
+++ b/compiler/backend/src/org/jetbrains/kotlin/codegen/inline/defaultMethodUtil.kt
@@ -130,7 +130,9 @@ fun <T, R : DefaultLambda> expandMaskConditionsAndUpdateVariableNodes(
         node.instructions.insert(position, newInsn)
     }
 
-    node.localVariables.removeIf { it.start in toDelete && it.end in toDelete }
+    node.localVariables.removeIf {
+        (it.start in toDelete && it.end in toDelete) || defaultLambdas.contains(it.index)
+    }
 
     node.remove(toDelete)
 
diff --git a/compiler/fir/fir2ir/tests-gen/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java b/compiler/fir/fir2ir/tests-gen/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
index da2726859e0..0ede1cab971 100644
--- a/compiler/fir/fir2ir/tests-gen/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
+++ b/compiler/fir/fir2ir/tests-gen/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
@@ -9843,6 +9843,11 @@ public class FirBlackBoxCodegenTestGenerated extends AbstractFirBlackBoxCodegenT
                 runTest("compiler/testData/codegen/box/defaultArguments/function/covariantOverrideGeneric.kt");
             }
 
+            @TestMetadata("defaultLambdaInline.kt")
+            public void testDefaultLambdaInline() throws Exception {
+                runTest("compiler/testData/codegen/box/defaultArguments/function/defaultLambdaInline.kt");
+            }
+
             @TestMetadata("extensionFunctionManyArgs.kt")
             public void testExtensionFunctionManyArgs() throws Exception {
                 runTest("compiler/testData/codegen/box/defaultArguments/function/extensionFunctionManyArgs.kt");
diff --git a/compiler/testData/codegen/box/coroutines/kt42554.kt b/compiler/testData/codegen/box/coroutines/kt42554.kt
index 24b0dbf609c..9db7f4ff185 100644
--- a/compiler/testData/codegen/box/coroutines/kt42554.kt
+++ b/compiler/testData/codegen/box/coroutines/kt42554.kt
@@ -1,5 +1,14 @@
 // WITH_RUNTIME
 
+// Need to ignore dexing for now. This generates invalid inner-class attributes on the IR backend.
+//
+// java.lang.AssertionError: D8 dexing error: D8 dexing info: Malformed inner-class attribute:
+//	outerTypeInternal: C$result$1
+//	innerTypeInternal: C$no_name_in_PSI_3d19d79d_1ba9_4cd0_b7f5_b46aa3cd5d40$WhenMappings
+//	innerName: WhenMappings
+//
+// IGNORE_DEXING
+
 import kotlin.coroutines.*
 
 fun launch(block: suspend () -> String): String {
diff --git a/compiler/testData/codegen/box/defaultArguments/function/defaultLambdaInline.kt b/compiler/testData/codegen/box/defaultArguments/function/defaultLambdaInline.kt
new file mode 100644
index 00000000000..5ea7219d744
--- /dev/null
+++ b/compiler/testData/codegen/box/defaultArguments/function/defaultLambdaInline.kt
@@ -0,0 +1,7 @@
+inline fun f(getString: () -> String = { "OK" }) = getString()
+inline fun g() { }
+
+fun box(): String {
+    g()
+    return f()
+}
\ No newline at end of file
diff --git a/compiler/testData/codegen/boxInline/defaultValues/lambdaInlining/genericLambda.kt b/compiler/testData/codegen/boxInline/defaultValues/lambdaInlining/genericLambda.kt
index f425be21738..9886812a50b 100644
--- a/compiler/testData/codegen/boxInline/defaultValues/lambdaInlining/genericLambda.kt
+++ b/compiler/testData/codegen/boxInline/defaultValues/lambdaInlining/genericLambda.kt
@@ -1,6 +1,3 @@
-// Enable for dexing once we have a D8 version with a fix for
-// https://issuetracker.google.com/148661132
-// IGNORE_DEXING
 // NO_CHECK_LAMBDA_INLINING
 // FILE: 1.kt
 package test
diff --git a/compiler/testData/codegen/boxInline/defaultValues/lambdaInlining/simpleGeneric.kt b/compiler/testData/codegen/boxInline/defaultValues/lambdaInlining/simpleGeneric.kt
index a12b033da38..8a5c76bffdb 100644
--- a/compiler/testData/codegen/boxInline/defaultValues/lambdaInlining/simpleGeneric.kt
+++ b/compiler/testData/codegen/boxInline/defaultValues/lambdaInlining/simpleGeneric.kt
@@ -1,6 +1,3 @@
-// Enable for dexing once we have a D8 version with a fix for
-// https://issuetracker.google.com/148661132
-// IGNORE_DEXING
 // FILE: 1.kt
 // SKIP_INLINE_CHECK_IN: inlineFun$default
 package test
diff --git a/compiler/tests-common/tests/org/jetbrains/kotlin/codegen/D8Checker.java b/compiler/tests-common/tests/org/jetbrains/kotlin/codegen/D8Checker.java
index c7856c4bc25..e91232a3cbd 100644
--- a/compiler/tests-common/tests/org/jetbrains/kotlin/codegen/D8Checker.java
+++ b/compiler/tests-common/tests/org/jetbrains/kotlin/codegen/D8Checker.java
@@ -40,9 +40,27 @@ public class D8Checker {
         });
     }
 
+    // Compilation with D8 should proceed with no output. There should be no info, warnings, or errors.
+    static class TestDiagnosticsHandler implements DiagnosticsHandler {
+        @Override
+        public void error(Diagnostic diagnostic) {
+            Assert.fail("D8 dexing error: " + diagnostic.getDiagnosticMessage());
+        }
+
+        @Override
+        public void warning(Diagnostic diagnostic) {
+            Assert.fail("D8 dexing warning: " + diagnostic.getDiagnosticMessage());
+        }
+
+        @Override
+        public void info(Diagnostic diagnostic) {
+            Assert.fail("D8 dexing info: " + diagnostic.getDiagnosticMessage());
+        }
+    }
+
     private static void runD8(Consumer<D8Command.Builder> addInput) {
         ProgramConsumer ignoreOutputConsumer = new DexIndexedConsumer.ForwardingConsumer(null);
-        D8Command.Builder builder = D8Command.builder()
+        D8Command.Builder builder = D8Command.builder(new TestDiagnosticsHandler())
                 .setMinApiLevel(28)
                 .setMode(CompilationMode.DEBUG)
                 .setProgramConsumer(ignoreOutputConsumer);
diff --git a/compiler/tests-gen/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java b/compiler/tests-gen/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
index 2b539076b31..f04fc8ffa0e 100644
--- a/compiler/tests-gen/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
+++ b/compiler/tests-gen/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
@@ -11243,6 +11243,11 @@ public class BlackBoxCodegenTestGenerated extends AbstractBlackBoxCodegenTest {
                 runTest("compiler/testData/codegen/box/defaultArguments/function/covariantOverrideGeneric.kt");
             }
 
+            @TestMetadata("defaultLambdaInline.kt")
+            public void testDefaultLambdaInline() throws Exception {
+                runTest("compiler/testData/codegen/box/defaultArguments/function/defaultLambdaInline.kt");
+            }
+
             @TestMetadata("extensionFunctionManyArgs.kt")
             public void testExtensionFunctionManyArgs() throws Exception {
                 runTest("compiler/testData/codegen/box/defaultArguments/function/extensionFunctionManyArgs.kt");
diff --git a/compiler/tests-gen/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java b/compiler/tests-gen/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
index a190e8c247f..2c3efe42faa 100644
--- a/compiler/tests-gen/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
+++ b/compiler/tests-gen/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
@@ -11243,6 +11243,11 @@ public class LightAnalysisModeTestGenerated extends AbstractLightAnalysisModeTes
                 runTest("compiler/testData/codegen/box/defaultArguments/function/covariantOverrideGeneric.kt");
             }
 
+            @TestMetadata("defaultLambdaInline.kt")
+            public void testDefaultLambdaInline() throws Exception {
+                runTest("compiler/testData/codegen/box/defaultArguments/function/defaultLambdaInline.kt");
+            }
+
             @TestMetadata("extensionFunctionManyArgs.kt")
             public void testExtensionFunctionManyArgs() throws Exception {
                 runTest("compiler/testData/codegen/box/defaultArguments/function/extensionFunctionManyArgs.kt");
diff --git a/compiler/tests-gen/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java b/compiler/tests-gen/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
index 856d146d81d..de8382c8918 100644
--- a/compiler/tests-gen/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
+++ b/compiler/tests-gen/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
@@ -9843,6 +9843,11 @@ public class IrBlackBoxCodegenTestGenerated extends AbstractIrBlackBoxCodegenTes
                 runTest("compiler/testData/codegen/box/defaultArguments/function/covariantOverrideGeneric.kt");
             }
 
+            @TestMetadata("defaultLambdaInline.kt")
+            public void testDefaultLambdaInline() throws Exception {
+                runTest("compiler/testData/codegen/box/defaultArguments/function/defaultLambdaInline.kt");
+            }
+
             @TestMetadata("extensionFunctionManyArgs.kt")
             public void testExtensionFunctionManyArgs() throws Exception {
                 runTest("compiler/testData/codegen/box/defaultArguments/function/extensionFunctionManyArgs.kt");
diff --git a/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java b/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java
index ab656bc1582..78071508f99 100644
--- a/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java
+++ b/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java
@@ -8353,6 +8353,11 @@ public class IrJsCodegenBoxES6TestGenerated extends AbstractIrJsCodegenBoxES6Tes
                 runTest("compiler/testData/codegen/box/defaultArguments/function/covariantOverrideGeneric.kt");
             }
 
+            @TestMetadata("defaultLambdaInline.kt")
+            public void testDefaultLambdaInline() throws Exception {
+                runTest("compiler/testData/codegen/box/defaultArguments/function/defaultLambdaInline.kt");
+            }
+
             @TestMetadata("extensionFunctionManyArgs.kt")
             public void testExtensionFunctionManyArgs() throws Exception {
                 runTest("compiler/testData/codegen/box/defaultArguments/function/extensionFunctionManyArgs.kt");
diff --git a/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java b/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
index 191c494524a..fdac53b6054 100644
--- a/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
+++ b/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
@@ -8353,6 +8353,11 @@ public class IrJsCodegenBoxTestGenerated extends AbstractIrJsCodegenBoxTest {
                 runTest("compiler/testData/codegen/box/defaultArguments/function/covariantOverrideGeneric.kt");
             }
 
+            @TestMetadata("defaultLambdaInline.kt")
+            public void testDefaultLambdaInline() throws Exception {
+                runTest("compiler/testData/codegen/box/defaultArguments/function/defaultLambdaInline.kt");
+            }
+
             @TestMetadata("extensionFunctionManyArgs.kt")
             public void testExtensionFunctionManyArgs() throws Exception {
                 runTest("compiler/testData/codegen/box/defaultArguments/function/extensionFunctionManyArgs.kt");
diff --git a/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java b/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
index 82fc5e0759a..22d7d2d69cc 100644
--- a/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
+++ b/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
@@ -8353,6 +8353,11 @@ public class JsCodegenBoxTestGenerated extends AbstractJsCodegenBoxTest {
                 runTest("compiler/testData/codegen/box/defaultArguments/function/covariantOverrideGeneric.kt");
             }
 
+            @TestMetadata("defaultLambdaInline.kt")
+            public void testDefaultLambdaInline() throws Exception {
+                runTest("compiler/testData/codegen/box/defaultArguments/function/defaultLambdaInline.kt");
+            }
+
             @TestMetadata("extensionFunctionManyArgs.kt")
             public void testExtensionFunctionManyArgs() throws Exception {
                 runTest("compiler/testData/codegen/box/defaultArguments/function/extensionFunctionManyArgs.kt");
diff --git a/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/wasm/semantics/IrCodegenBoxWasmTestGenerated.java b/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/wasm/semantics/IrCodegenBoxWasmTestGenerated.java
index 38e97a4ec19..d7532a786f2 100644
--- a/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/wasm/semantics/IrCodegenBoxWasmTestGenerated.java
+++ b/js/js.tests/tests-gen/org/jetbrains/kotlin/js/test/wasm/semantics/IrCodegenBoxWasmTestGenerated.java
@@ -4033,6 +4033,11 @@ public class IrCodegenBoxWasmTestGenerated extends AbstractIrCodegenBoxWasmTest
                 runTest("compiler/testData/codegen/box/defaultArguments/function/covariantOverrideGeneric.kt");
             }
 
+            @TestMetadata("defaultLambdaInline.kt")
+            public void testDefaultLambdaInline() throws Exception {
+                runTest("compiler/testData/codegen/box/defaultArguments/function/defaultLambdaInline.kt");
+            }
+
             @TestMetadata("extensionFunctionManyArgs.kt")
             public void testExtensionFunctionManyArgs() throws Exception {
                 runTest("compiler/testData/codegen/box/defaultArguments/function/extensionFunctionManyArgs.kt");