diff --git a/core/org.eclipse.cdt.core.tests/ChangeLog b/core/org.eclipse.cdt.core.tests/ChangeLog
index b589c5494db..a9083860a41 100644
--- a/core/org.eclipse.cdt.core.tests/ChangeLog
+++ b/core/org.eclipse.cdt.core.tests/ChangeLog
@@ -1,6 +1,10 @@
 2003-07-25 Bogdan Gheorghe
 	Added new indexer test for refs
 	
+2003-07-25 Victor Mozgin
+	Moved testBug39553() from ASTFailedTests.java to QuickParseASTTests.java.
+	Fixed IIncludeTest.h and IIncludeTests.java with #include macro tests.
+
 2003-07-24 John Camelon
 	Updated CompleteParseASTTests for Method/Field updates.
 	Fixed TortureTest's parser mode switch (was always QuickParsing). 
diff --git a/core/org.eclipse.cdt.core.tests/failures/org/eclipse/cdt/core/parser/failedTests/ASTFailedTests.java b/core/org.eclipse.cdt.core.tests/failures/org/eclipse/cdt/core/parser/failedTests/ASTFailedTests.java
index a4006397ef9..b1d21115788 100644
--- a/core/org.eclipse.cdt.core.tests/failures/org/eclipse/cdt/core/parser/failedTests/ASTFailedTests.java
+++ b/core/org.eclipse.cdt.core.tests/failures/org/eclipse/cdt/core/parser/failedTests/ASTFailedTests.java
@@ -145,11 +145,6 @@ public class ASTFailedTests extends BaseASTTest
         assertEquals( variable.getName(), "id");
     }
     
-    public void testBug39553() throws Exception
-    {
-        parse("#define COMP_INC \"foobar.h\"  \n" + "#include COMP_INC");
-        assertFalse( quickParseCallback.getInclusions().hasNext() );
-    }
     public void testBug39554() throws Exception
     {
         assertCodeFailsParse("_Pragma(\"foobar\")");
diff --git a/core/org.eclipse.cdt.core.tests/model/org/eclipse/cdt/core/model/tests/IIncludeTests.java b/core/org.eclipse.cdt.core.tests/model/org/eclipse/cdt/core/model/tests/IIncludeTests.java
index 156bb121cb1..e09ea53c5ca 100644
--- a/core/org.eclipse.cdt.core.tests/model/org/eclipse/cdt/core/model/tests/IIncludeTests.java
+++ b/core/org.eclipse.cdt.core.tests/model/org/eclipse/cdt/core/model/tests/IIncludeTests.java
@@ -76,11 +76,11 @@ public class IIncludeTests extends IntegratedCModelTest {
 			new String("whitespace_before_hash"),
 			new String("resync_after_bad_parse_1"),			
 			new String("resync_after_bad_parse_2"),
-			new String("one"),  // C-spec does not allow this, but that's OK for our present purposes
+			new String("onetwothree"),  // C-spec does not allow this, but that's OK for our present purposes
 			new String("resync_after_bad_parse_3"),
 			new String("invalid.h"),  // C-spec does not allow this, but that's OK for our present purposes
-			// TODO: expect new String("MYINCFILE"),
-			// TODO: expect new String("xstr(INCFILE(2)).h")						
+			new String("myInclude1.h"),
+			new String("vers2.h")						
 		};
 		assertEquals( getIncludeNameList.length, theIncludes.length );
 		for( int i=0; i<getIncludeNameList.length; i++ )
diff --git a/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/QuickParseASTTests.java b/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/QuickParseASTTests.java
index 5cd9dc0b0f3..9e2157346d8 100644
--- a/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/QuickParseASTTests.java
+++ b/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/QuickParseASTTests.java
@@ -1157,8 +1157,8 @@ public class QuickParseASTTests extends BaseASTTest
 		
 		assertEquals( i.getName(), "stdio.h");
 		assertEquals( i.getStartingOffset(), 0 ); 
-		assertEquals( i.getNameOffset(), 10 ); 
-		assertEquals( i.getEndingOffset(), 18 );
+		assertEquals( i.getNameOffset(), 9 ); 
+		assertEquals( i.getEndingOffset(), 19 );
 		
 		
 		IASTMacro m = (IASTMacro)macros.next();
@@ -1703,4 +1703,10 @@ public class QuickParseASTTests extends BaseASTTest
 		
 		parse(code.toString());
 	}
+	
+	public void testBug39553() throws Exception	
+	{
+		parse("#define COMP_INC \"foobar.h\"  \n" + "#include COMP_INC");
+		assertTrue( quickParseCallback.getInclusions().hasNext() );
+	}
 }
\ No newline at end of file
diff --git a/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/ScannerTestCase.java b/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/ScannerTestCase.java
index e62bfe5fc73..e2a0fef593c 100644
--- a/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/ScannerTestCase.java
+++ b/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/ScannerTestCase.java
@@ -1241,7 +1241,7 @@ public class ScannerTestCase extends BaseScannerTest
 		initializeScanner( writer.toString() ); 
 		validateIdentifier("fputs"); 
 		validateToken(IToken.tLPAREN); 
-		validateString("strncmp ( \\\"abc\\\\0d\\\" , \\\"abc\\\" , '\\\\4' ) == 0"); 
+		validateString("strncmp(\\\"abc\\\\0d\\\", \\\"abc\\\", '\\\\4') == 0"); 
 		validateToken(IToken.tCOMMA); 
 		validateIdentifier("s"); 
 		validateToken(IToken.tRPAREN); 
@@ -1270,7 +1270,7 @@ public class ScannerTestCase extends BaseScannerTest
 		try{
 			validateEOF();
 		} catch ( ScannerException e ){
-			assertTrue( e.getMessage().equals( "Ill-formed #include: reached end of line before \"" ));
+			assertTrue( e.getMessage().equals( "Unbounded string" ));
 		}
 	
 		initializeScanner( "#include <foo.h" );
diff --git a/core/org.eclipse.cdt.core.tests/resources/cmodel/IIncludeTest.h b/core/org.eclipse.cdt.core.tests/resources/cmodel/IIncludeTest.h
index 7083fa8d77d..04b6e419a44 100644
--- a/core/org.eclipse.cdt.core.tests/resources/cmodel/IIncludeTest.h
+++ b/core/org.eclipse.cdt.core.tests/resources/cmodel/IIncludeTest.h
@@ -38,5 +38,5 @@ EMPTY #include "invalid.h"
 #define INCFILE(x) vers ## x
 #define xstr(x) str(x)
 #define str(x) #x
-#include xstr(INCFILE(2)).h
+#include xstr(INCFILE(2).h)
 
diff --git a/core/org.eclipse.cdt.core/parser/ChangeLog b/core/org.eclipse.cdt.core/parser/ChangeLog
index a9a67e1672d..1d417e64653 100644
--- a/core/org.eclipse.cdt.core/parser/ChangeLog
+++ b/core/org.eclipse.cdt.core/parser/ChangeLog
@@ -1,3 +1,6 @@
+2003-07-25 Victor Mozgin
+	Fixed PR 39553 : Macros are not expanded in #include statements.
+
 2003-07-24 John Camelon
 	Added COMPLETE_PARSE support for Method and Field declarations and cross-references. 
 	Fixed some small ParserSymbolTable bugs.
diff --git a/core/org.eclipse.cdt.core/parser/org/eclipse/cdt/internal/core/parser/Scanner.java b/core/org.eclipse.cdt.core/parser/org/eclipse/cdt/internal/core/parser/Scanner.java
index ddcbc208505..b1f4e5f9ef1 100644
--- a/core/org.eclipse.cdt.core/parser/org/eclipse/cdt/internal/core/parser/Scanner.java
+++ b/core/org.eclipse.cdt.core/parser/org/eclipse/cdt/internal/core/parser/Scanner.java
@@ -1872,70 +1872,111 @@ public class Scanner implements IScanner {
 	}
 
 	protected void poundInclude( int beginningOffset ) throws ScannerException {
-		skipOverWhitespace();
-		int c = getChar();
-		int offset;
-		
-		if( c == '/' ){
-			c = getChar();
-			if( c == '*' ){
-				skipOverMultilineComment();
-				skipOverWhitespace();
-				c = getChar();
-			} else {
-				if( throwExceptionOnBadPreprocessorSyntax )
-					throw new ScannerException( "Encountered ill-formed #include" );
-				else return;
-			}
-		}
 
+		skipOverWhitespace();				
+		int baseOffset = lastContext.getOffset() - lastContext.undoStackSize();
+		String includeLine = getRestOfPreprocessorLine();
 		StringBuffer fileName = new StringBuffer();
 		boolean useIncludePath = true;
-		int endChar = -1;
-		if( c == '<' ){
-			endChar = '>'; 		 
-		} else if ( c == '"' ){
-			endChar = '"';
-			useIncludePath = false;
-		} else {
-			if( throwExceptionOnBadPreprocessorSyntax )
-				throw new ScannerException( "Encountered ill-formed #include");
-			else return; 
-		}
-		
-		c = getChar();
-
-		while ((c != '\n') && (c != endChar) && (c != NOCHAR)){
-			if( c == '\r' ){
-				c = getChar();
-				continue;
-			}
-			fileName.append((char) c);
-			c = getChar();
-		}
+		int startOffset = baseOffset;
+		int endOffset = baseOffset; 
 			
-		if( c != endChar ){ 
-			if( throwExceptionOnBadPreprocessorSyntax )
-				throw new ScannerException( "Ill-formed #include: reached end of line before " + (char)endChar );
-			else return;
+		if (! includeLine.equals("")) {
+			Scanner helperScanner = new Scanner(
+										new StringReader(includeLine), 
+										null, 
+										new ScannerInfo(definitions, originalConfig.getIncludePaths()), 
+										problemReporter, 
+										translationResult,
+										new NullSourceElementRequestor(),
+										mode);
+			IToken t = null;
+			
+			try {
+				t = helperScanner.nextToken(false);
+			} catch (EndOfFile eof) {
+				if (throwExceptionOnBadPreprocessorSyntax) {
+						 throw new ScannerException( "Encountered ill-formed #include" );
+				}
+				
+				return;
+			}
+
+			try {
+				if (t.getType() == IToken.tSTRING) {
+					fileName.append(t.getImage());
+					startOffset = baseOffset + t.getOffset();
+					endOffset = baseOffset + t.getEndOffset();
+					useIncludePath = false;
+					
+					// This should throw EOF
+					t = helperScanner.nextToken(false);
+
+					if (throwExceptionOnBadPreprocessorSyntax) {
+						throw new ScannerException( "Encountered ill-formed #include" );
+					}
+					
+					return;
+				} else if (t.getType() == IToken.tLT) {
+					
+					try {
+						startOffset = baseOffset + t.getOffset();					
+						t = helperScanner.nextToken(false);
+						
+						while (t.getType() != IToken.tGT) {
+							fileName.append(t.getImage());
+							helperScanner.skipOverWhitespace();
+							int c = helperScanner.getChar();
+							if (c == '\\') fileName.append('\\'); else helperScanner.ungetChar(c);
+							t = helperScanner.nextToken(false);
+						}
+						
+						endOffset = baseOffset + t.getEndOffset();
+						
+					} catch (EndOfFile eof) {
+						if (throwExceptionOnBadPreprocessorSyntax) {
+								 throw new ScannerException( "Ill-formed #include: reached end of line before >" );
+						}
+				
+						return;
+					}
+					
+					// This should throw EOF
+					 t = helperScanner.nextToken(false);
+
+					 if (throwExceptionOnBadPreprocessorSyntax) {
+						 throw new ScannerException( "Encountered ill-formed #include" );
+					 }
+	
+					 return;
+					
+				} else if (throwExceptionOnBadPreprocessorSyntax) {
+					throw new ScannerException( "Encountered ill-formed #include" );
+				}
+			}
+			catch( EndOfFile eof )
+			{
+				// good
+			}
+			
+		} else if (throwExceptionOnBadPreprocessorSyntax) {
+			throw new ScannerException( "Encountered ill-formed #include" );
 		}
-		
+
 		String f = fileName.toString();
-		offset = contextStack.getCurrentContext().getOffset() - f.length() - 1; // -1 for the end quote
 		
 		if( mode == ParserMode.QUICK_PARSE )
 		{ 
 			if( requestor != null )
 			{
 				IASTInclusion i = astFactory.createInclusion( f, "", !useIncludePath, beginningOffset, 
-					contextStack.getCurrentContext().getOffset(), offset );
+					endOffset, startOffset );
 				i.enterScope( requestor );
 				i.exitScope( requestor );					 
 			}
 		}
 		else
-			handleInclusion(f.trim(), useIncludePath, offset, beginningOffset, contextStack.getCurrentContext().getOffset() ); 
-
+			handleInclusion(f.trim(), useIncludePath, startOffset, beginningOffset, endOffset); 
 	}
 
 	protected void poundDefine(int beginning) throws ScannerException, EndOfFile {
@@ -2097,7 +2138,7 @@ public class Scanner implements IScanner {
     
     protected Vector getMacroParameters (String params, boolean forStringizing) throws ScannerException {
         
-        IScanner tokenizer  = ParserFactory.createScanner(new StringReader(params), TEXT, new ScannerInfo( definitions, originalConfig.getIncludePaths() ), mode, new NullSourceElementRequestor(), problemReporter, translationResult );
+        Scanner tokenizer  = new Scanner(new StringReader(params), TEXT, new ScannerInfo( definitions, originalConfig.getIncludePaths() ), problemReporter, translationResult, new NullSourceElementRequestor(), mode);
         Vector parameterValues = new Vector();
         Token t = null;
         String str = new String();
@@ -2106,6 +2147,12 @@ public class Scanner implements IScanner {
         
         try {
             while (true) {
+				int c = tokenizer.getChar();
+				if ((c != ' ') && (c != '\t') && (c != '\r') && (c != '\n')) {
+					space = false;
+				}
+				if (c != NOCHAR) tokenizer.ungetChar(c);
+				
                 t = (Token)(forStringizing ? tokenizer.nextTokenForStringizing() : tokenizer.nextToken(false));
                 if (t.type == IToken.tLPAREN) {
                     nParen++;
@@ -2261,7 +2308,7 @@ public class Scanner implements IScanner {
 					
 					if( t.getType() != tPOUNDPOUND && ! pastingNext )
 						if (i < (numberOfTokens-1)) // Do not append to the last one 
-                            buffer.append( " " ); 
+                        	buffer.append( " " ); 
 				}
 				String finalString = buffer.toString();
 				contextStack.updateContext(