diff --git a/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/ast2/CompleteParser2Tests.java b/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/ast2/CompleteParser2Tests.java
index 7fb3a701ed3..b994fcb6956 100644
--- a/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/ast2/CompleteParser2Tests.java
+++ b/core/org.eclipse.cdt.core.tests/parser/org/eclipse/cdt/core/parser/tests/ast2/CompleteParser2Tests.java
@@ -2654,4 +2654,16 @@ public class CompleteParser2Tests extends TestCase {
 
     	assertInstances(col, bar, 1);
     }
+    
+    public void test173874_nestedClasses() throws Exception {
+    	String code = "class aClass { class bClass; int x; };";
+    	IASTTranslationUnit tu = parse(code, true, ParserLanguage.CPP, true);
+    	
+    	CPPNameCollector col = new CPPNameCollector();
+    	tu.accept(col);
+    	
+    	ICPPClassType cls = (ICPPClassType)col.getName(0).resolveBinding();
+    	ICPPClassType[] nested = cls.getNestedClasses();
+    	assertEquals(1, nested.length);
+    }
 }
diff --git a/core/org.eclipse.cdt.core/parser/org/eclipse/cdt/internal/core/dom/parser/cpp/CPPClassType.java b/core/org.eclipse.cdt.core/parser/org/eclipse/cdt/internal/core/dom/parser/cpp/CPPClassType.java
index 4288fed6e10..336dba04460 100644
--- a/core/org.eclipse.cdt.core/parser/org/eclipse/cdt/internal/core/dom/parser/cpp/CPPClassType.java
+++ b/core/org.eclipse.cdt.core/parser/org/eclipse/cdt/internal/core/dom/parser/cpp/CPPClassType.java
@@ -793,7 +793,7 @@ public class CPPClassType extends PlatformObject implements ICPPClassType, ICPPI
                 return new ICPPClassType[] { new CPPClassTypeProblem( node, IProblemBinding.SEMANTIC_DEFINITION_NOT_FOUND, getNameCharArray() ) };
             }
         }
-	    IBinding binding = null;
+		
 	    ICPPClassType [] result = null;
 	    
 	    IASTDeclaration [] decls = getCompositeTypeSpecifier().getMembers();
@@ -801,12 +801,13 @@ public class CPPClassType extends PlatformObject implements ICPPClassType, ICPPI
 			IASTDeclaration decl = decls[i];
 			while( decl instanceof ICPPASTTemplateDeclaration )
 				decl = ((ICPPASTTemplateDeclaration)decl).getDeclaration();
-            if( decls[i] instanceof IASTSimpleDeclaration ){
-				IASTDeclSpecifier declSpec = ((IASTSimpleDeclaration) decls[i]).getDeclSpecifier();
+            if( decl instanceof IASTSimpleDeclaration ){
+            	IBinding binding = null;
+				IASTDeclSpecifier declSpec = ((IASTSimpleDeclaration) decl).getDeclSpecifier();
 				if( declSpec instanceof ICPPASTCompositeTypeSpecifier ){
 					binding = ((ICPPASTCompositeTypeSpecifier)declSpec).getName().resolveBinding();
 				} else if( declSpec instanceof ICPPASTElaboratedTypeSpecifier &&
-						   ((IASTSimpleDeclaration)decls[i]).getDeclarators().length == 0 )
+						   ((IASTSimpleDeclaration)decl).getDeclarators().length == 0 )
 				{
 					binding = ((ICPPASTElaboratedTypeSpecifier)declSpec).getName().resolveBinding();
 				}